How do I start off building a credit score? First credit card.

[ResistanceXP]

Hi everyone,

I'm 21 years old, and in college, and I want to start building my credit score already. How should I start this off? Should I start with a Chase security card (My main bank), or should I go for a credit union? I also have friends whom told me to get a gas card or a store card, which is an easy way to start off (but I'm pretty frugal with gas).

I'm also wondering if I should do one big purchase, and pay it off monthly, or buy something small each month and pay it all off before the due date. How do you guys usually use your credit card to build a great score?

I applied for Discover college student card quite awhile ago, and I didn't get accepted. I think my score was around 571 lol

Thanks so much.

[lorraineb]

To begin, get any card that you can as long as you are confident that you can pay off any balance that you put on it in full each month. If you don't have this confidence, don't get a card.

It's usually easier to get store cards or gas cards. If you get a credit card, the work great too. You want to make small purchases that you would make any way and place them on these cards. Again, you have to be sure to pay them off in full each month. You don't get any extra bonus points for leaving a balance on them and the interest rates are outrageous.

Then just give it some time. If you pay off your balances in full each month and aren't late, your credit score will gradually build and build.

[John213]

I started with a secured credit card with my bank, deposited $100 (which I got back after 1 year) for $500 credit limit then use it and pay it monthly.

[autoxer]

Don't charge more than you can pay off that month. It isn't worth paying interest, just to build a better credit score. Just charge small things and make the payments on time and your credit history will build itself.

[ua_guy]

I don't like the idea of secured cards. If you're rebuilding credit, that's one thing. To establish credit, no, I'd find a bank that would give me a low-limit card with no fees or up-front deposits. When I was 21 (ten years ago...), I got a card through Capital One with a $500 limit. Just having the account open and putting planned expenses on there and paying the bill in full each month built a credit score just fine. If you treat it like a debit card (never swipe the card unless you can cover the expense in full), you'll be fine.

[Gailete]

You will naturally through time increase your credit score just by getting an apartment and paying your own utilities and rent on time, paying off any school loans, paying car insurance, having a checking and savings account and not bouncing checks. I don't think you need to get a credit card to get an improved credit score. Your credit score is in the toilet because of your age and you haven't done all the stuff that builds a credit score. Once you start doing the adult things in life, you will see it start to climb. You don't really have to try to force it.

[cardtrick]

Most people don't understand exactly what builds credit. Lucky for you, there are forums on the internet dedicated to this topic.

1. It doesn't matter whether you use your card or not. That does not build credit. Just make sure you use it at least once every 6 months, so the card isn't closed due to inactivity. And when you do use it, pay it off asap to avoid interest charges. Having the card on your credit file (whether or not it has a balance) is all that matters.

2. Apply for secured card to start off. Chase doesn't have one, last time I checked. Your best bet is to go to a credit union, make sure they offer secured cards and then become a member there.

3. Make sure you never have high balances as a % of credit. The best number is under 10%. So if you get a card with a limit of $500, make sure you never have a balance of more than $50. CC companies usually report your closing balance for that month to the bureaus but you never know. If they report on a random date and your balance is high, your score will drop and stay low until a lower balance is reported to the bureaus. Remember that credit scores are based on a snapshot of all your credit items on a certain day of the month.

4. Paying rent and utilities does nothing for your credit because those are mostly not reported, unless you default on them.

5. Find a forum for building credit and read through the sticky posts.

[hamchan]

You will naturally through time increase your credit score just by getting an apartment and paying your own utilities and rent on time, paying off any school loans, paying car insurance, having a checking and savings account and not bouncing checks. I don't think you need to get a credit card to get an improved credit score. Your credit score is in the toilet because of your age and you haven't done all the stuff that builds a credit score. Once you start doing the adult things in life, you will see it start to climb. You don't really have to try to force it.

Actually, except for student loans, none of these things will have a positive impact on your credit score. They only show up if an account goes delinquent or into collections. My husband never had a credit card, student loan, auto loan, or any other kind of credit, and at the age of 35 he still had no credit score. Not until I put him as an authorized user on one of my cards, at which point he started getting his own credit offers.

At the very least you need some kind of credit card or installment loan. None of that other stuff makes a difference.

[hamchan]

And to add to what cardtrick said, if you use your card do not make a payment until after the billing cycle ends (when you get your bill). If you pay it before that it will show up on your credit report as having a zero balance, which is not optimal. It only counts as an on time payment if a payment is made that will show up on your credit report.

[Gailete]

Over the years, I have never done anything intentionally to get a good credit score, ever! Yet I would bet I have one of the highest scores on this forum. A student just finishing college, has done nothing much to 'build' a credit score, but doing the normal things of life will start to establish one and grow it. There are many things that go into building a credit score. I would never encourage anyone to get a credit card to build a credit score unless they know themselves very well and know that they can pay off anything that is charged immediately. I have also read about having a good credit score as well from many sources, and I realize that some of you seem to think I grew up behind a turnip patch and know nothing about this subject and that you are the experts, but that isn't necessarily so. When you apply for a loan for a house, etc. they look at not only your credit score, but how much you can charge on all your cards combined. So someone with $10K worth of credit cards applying for a loan, they will assume you have used all the credit you have available (since you can as soon as the loan is approved), not just the $50 or so that is charged. If you have too much in charging ability, you can be refused for the loan. As to using a card every couple of months to keep it active, that is nonsense. I don't know where you get your cards from, but we have at least 4 that we haven't used in years. We still get all sorts of offers for 0% checks for 6 months to a year on them. As a matter of fact got one of those just yesterday on a card we haven't used for at least three years. I see several other unused but active cards in my Chase account whenever I pay my bill on one of the cards. I have no need to use them, so I don't.

One of the things that I have read that is shocking to me, is how many students come out of college owing way to much on credit cards or once they graduate start charging, instead of doing without until they can afford something. They are miserably in debt and then the student loans come due and they begin to drown. Once you have that card in your wallet it is too tempting to use it and use it again and again when your paycheck doesn't seem to be stretching, but if it won't stretch one month, how are you going to pay it off the next month with the same size paycheck? While you think it won't happen to you, I'm sure many students and new grads have thought the same thing and then wondered why they are in so much debt.

I would urge extreme caution in getting and using credit cards. If you want the ability to use plastic, then get a debit card to go along with your checking account if you need that convenience instead of paying cash.

[hamchan]

You do not necessarily need a credit card to have a good credit score, but you do need some kind of installment loan if you insist on having no cards. I go over my credit report with a fine toothed comb on a regular basis, and I know what is on there and what isn't. Never, ever have I seen anything show up on there for having a checking or savings account, paying rent on time, paying utilities on time, having a cell phone contract, etc. It is simply a myth that doing these things will raise your credit score. They don't.

You do not need to go into debt to build a credit score either. I rebuilt my credit after bankruptcy without ever carrying a balance, and my husband built a very good credit score without ever carrying a balance. We both use our cards to pay for things we'd be paying for anyway, and pay them off every month.

One of the things that actually does impact your score is the number of accounts you have open. The more accounts you have, the higher your score. Average number of open accounts for those with the highest scores is somewhere around 20.