Establishing First Time Credit for College Students

It is easier to get a credit card while you are a college student then if you wait until after you get out of college. This is because several credit card companies offer college student credit cards because they know that the student’s parents will usually bail them out if the student cannot pay the bill. The student cards will start with a low credit line of up to $500.

If you wait until after you get out of college, it will take you longer to get a credit card if you have not established your credit worthiness by showing your capability to pay back a loan. For instance on the Discover Card Student application it says: “Except for full-time students, you must have a minimum annual household income of $15,000 to be considered for any Discover Card account.” So establishing first time credit while you are a full-time student is the easiest way to get credit established.

The first step for establishing credit is to have a checking account.

Establishing first time credit will be very difficult if you have not had a checking account for at least six months. The credit card companies want some way to measure whether you can handle money. If you have ever had a parent co-sign on a loan, that also helps establish credit.

You can open an online payment account with HSBC and do online banking rather than writing checks. HSBC pays interest on the online checking account as well as on their savings account. You can do bank-to-bank transfers, or you can have direct deposit set up if you are employed and your employer provides direct deposit.

If you are not employed and your parents do not want to transfer money online from their account to yours, consider a free checking account with Washington Mutual Bank. Once you click here, you can click on Find A Location to see if they have a bank in your area.

The second step is to apply for one credit card.

Do not apply for multiple credit cards at one time. This can hurt your credit because each request shows up on your credit report. If the second and third company see that you have already requested credit, they could turn you down for fear that you will get multiple cards and charge all of them to their maximum limits. Each inquiry to your credit report can remove two to five points from your credit score. So if you are a full-time college student, we recommend you start with the Discover Card student application.

If you are denied, read the “Your Rights When You Receive an Adverse Action Letter”
part of our article at How to Dispute and Repair Your Credit History Report.

If you are denied, then you can apply for a secured credit card that will require that you make a deposit or put up some collateral. This will allow you to get your credit established.

In Summary

If you are a full-time student, that is the easiest time to establish first time credit.