There’s no better time to open a credit card account than in college. Applying for credit cards will help you get through any financial crisis. Not only that but most businesses give you rewards for your purchases. The most important part is that you’ll get to build your credit score.
Credit cards help you pay your bills on time, which increases your credit score. This is important when you apply for loans and mortgages in the future. With great credit scores, you can get your application approved in no time. Aside from that, they give you access to more rewards and perks, such as low-interest rates on loans.
An 850 credit score is the perfect credit score possible. But you don’t need to worry about how to get an 850 credit score. You can still enjoy these benefits even with a score of 700. This is the lowest possible score you can get within the good credit score range.
Luckily, building a good to excellent credit score is easy. You just need to follow the best credit habits and practices. This article will discuss a few credit card tips for you to get started on your credit journey.
1. Focus on Building Your Credit Score
Before you get to use your credit card, you need to have a good credit score. If you don’t already know, credit scores determine your creditworthiness. It helps lenders and credit card providers determine if you can repay them on time. If you have a low or bad credit score, it will be difficult for you to apply for loans or receive the benefits you’re meant to get.
There are plenty of factors on which your credit score depends. But, the five most important are the following:
- Your payment history
- The amount you owe
- The length of your credit history
- The type of credit card you’re using
- The number of credit accounts you have
Keeping these in check will help you build a good credit habit, which, in turn, increases your credit score.
2. You Can Get Your Bad Credit Fixed From Credit Repair Services
Getting a bad credit score is normal when it’s your first time handling credit cards. It may be because of missed or late payments, a history of poor collection, or unpaid charge-offs. But sometimes, the negative marks on your credit report can be because of credit card fraud. And even if it’s not your fault, you can still get a bad credit score because of this.
A bad credit score does not mean the end of the world. You can fix this with the help of a credit repair company.
But how much does credit repair cost?
There are cheap credit repair services for college students like you. You can pay as little as $69 per month, depending on your credit situation. These affordable credit repair services can help you dispute errors on your credit report. Not only that but credit repair companies can also help you make timely payments.
In essence, credit repair can help you boost your credit score. Top-rated credit repair services offer the best value for doing so.
3. Apply for Only One Card
Since you’re just starting, one card is enough to help you with your finances. It can be tempting to apply for another card, especially after looking at its benefits. But this can get you in trouble with your credit score.
When you apply for many credit cards in a short period, it affects your score badly. Credit card providers will need to check your credit report before they approve your application.
This is a hard inquiry and will appear on your credit report. Hard inquiries remove points from your credit score. If you have an excellent credit score, you won’t have to worry about this. But since you’re just starting to build your credit history, you can’t risk having points removed from your score.
To avoid this, you should apply for one card in the meantime. Not only that but you can also focus more on building your credit score instead of thinking about how to repay multiple cards. This helps you build better credit-building habits.
4. You Can Apply for Student Credit Cards
Student credit cards exist, and they are especially helpful for college students. These credit cards offer incentives specific to your needs as a student. If you’re new to credit cards, a student credit card is exactly what you need. Using one is the best way to build your credit history early.
Providers of such credit cards know that you have little to no credit history. That’s why they don’t place as much emphasis on it as they would on ordinary credit cards. But, much like regular credit cards, student credit cards offer different incentives. You need to know how you can choose one that fits your needs.
Despite that, most of these cards often have lower or no annual fees. They also offer better APRs for those with no credit history. You can also switch to a non-student version once you finish school.
5. Opt for a Secured Credit Card
Before you apply for a credit card, you need to make sure you meet all the requirements. If not, well, don’t lose hope! You can still get a secured credit card to help you build a good credit history.
To get started with secured credit cards, you will need to deposit some cash. This will serve as collateral, which means if you can’t make payments, you can use the cash deposit to pay. Do take note that the amount of cash you deposit on a secured credit card will be your credit limit.
Because of this, you can avoid missing out on repaying your credit. It’s also an affordable credit card choice for students with less income. As you can imagine, this will increase your credit score in a short amount of time.
6. Don’t Go Over Your Credit Limit
Credit cards give you easy access to money that you currently don’t have. Because of this, it’s tempting to spend more than you can afford. In fact, most credit card holders tend to overspend when they use their credit cards as a mode of payment. That is, they are willing to spend 83% more than when they’re paying with cash.
But you need to remember that the money you get from your credit card isn’t free. That means you’ll have to pay it back sometime, depending on the terms you agreed with the provider.
This is why credit cards have a spending limit. Providers take into account your gross annual income, your repayment history, and the number of credit cards you own. For students, the credit limit is often low, which will help them avoid overspending.
Keep your credit limit in check and don’t spend more than the limit. It also helps to set a budget for how much you can afford to spend using your credit card.
7. Don’t Be Tempted to Get Cash Advances Using Your Credit Card
Most people treat credit cards like debit cards, and that’s a huge mistake that you’ll ever make. Yes, you can make a cash withdrawal using your credit card, but this will cost you a lot of money.
Credit card issuers impose a 2% to 4% cash advance fee for cash advances. Some also impose higher interest rates and additional expenses. In the end, you’ll pay far more than the money you took out using the card.
8. Always Check Your Credit Report
The law states that any credit card holder is entitled to a copy of their credit report. You can view yours from each of the three major credit bureaus online.
But why is it important to check your credit report often?
Your credit report holds all the information regarding your payment dues, transactions, and benefits. The best way to remember when your purchases, incentives, and bills are due is to monitor your credit card account. You can also find out if there are errors in your information or potential fraud through your credit report.
If you build the habit of monitoring your credit report, you can avoid missing payments and fraudulent activities. You can set up alerts every time you buy something with your card. This will make it easier for you to monitor your spending and balance. The alert also notifies you of any fraudulent purchases.
If you do find some errors or inaccuracies, don’t hesitate to hire credit repair professionals. They will help you forward your dispute to the credit bureaus and will even negotiate on your behalf.
9. Keep Your Credit Card Only to Yourself
It’s nice to help a friend out in times of financial trouble, but you should avoid lending them your credit card. Remember that whatever purchases are made with your card will reflect on your personal credit score. You’re also the one responsible for paying back the money they spent using your card.
If they spend more than you can pay, you risk going into debt. You don’t want that to happen during your first time in the credit world.
Be a Responsible Credit Card Holder
Getting a credit card while you’re still in college can help you build a solid foundation for your future finances. But this only works when you use the card properly. Spend some time doing your research before applying for your first credit card.
Getting great credit scores means being a responsible credit card holder. These tips can help you build a good credit history and good credit card habits. By doing so, you can successfully raise your credit score, which gives you access to great benefits.