Student Credit Guide

Acquiring your first credit card as a student can help you establish a good credit history. Young adults typically get credit in order to qualify for other types of financing in the future such as auto loans or mortgage. Unfortunately, some students make serious credit mistakes, and instead of building a good history, they acquire a low credit score. If considering getting your first credit card, consider tips for managing your credit.

Start with a Secured Credit Card

Students not accustomed to paying bills may consider starting off with a secured credit card. This requires first opening a bank account, saving money for a deposit (about $500) and then applying for a secured card with their personal bank. There are good reasons for establishing credit with a secured credit card. These cards are easier for students to acquire with no credit history because they require a deposit or collateral. Credit limits are low in the beginning but gradually increase as students submit timely payments and demonstrate the ability to manage credit and debt.

Check Finances Before Making a Purchase

Young adults enjoy shopping and entertainment, and with a credit card in-hand, it's tempting for students to shop impulsively or purchase items that they cannot afford. Credit cards are not meant to buy every item on a wish list. Ideally, it's best to save credit cards for emergencies only. Using credit is key to building a good credit history. However, students should only charge what they can afford to pay back.

Managing Debt

Careful budgeting and spending is key to keeping debt balances to a minimum. Yet, some students shop to the point of maxing out credit cards. High credit card balances can hurt a credit rating, and this isn't the way to build a good credit history. Credit scores increase as debts are paid down. Along with only buying affordable merchandise, students need to develop a habit of paying off their credit cards in full each month to avoid heavy debts.

Knowing Your Credit Profile

Acquiring and using credit aren't the only two ways to build a good credit history. Taking time to review credit profiles also help improve credit scores. Credit profiles or credit reports outline the names of current and past creditors, balances on credit cards and the status of credit accounts. Creditors update reports regularly. But sometimes, reports include mistakes or inaccuracies. Students who start a habit of checking their profiles at least once a year can avoid credit problems that result from inaccuracies. Annual Credit Report is the source to get a free copy of reports from all three bureaus.