Student loans are a type of credit (non-revolving) and yes, paying on the loans helps to show a payment history. No one thing is going to help a lot, but all will help a little. You might want to pay the interest on your unsubsidized loan, and you could pay it monthly or quarterly or even yearly. The loan will stay in a ‘current’ status.
You have to watch all the time to make sure things are paid off. Not too long ago, I had a bill of $2.12. Yep, that was my monthly bill. I remember going into my account to pay it, and somehow I didn’t click the right button. It caused a finance charge, but luckily it was my own bank (in fact I was in the bank and the teller told me about it) so they waived all the fees and there was no late charge. Many (many) years ago had a JCPenney account, bought a pair of jeans for $28 and paid the bill for $28. They only credited $23, so charged me $5 plus a finance charge of $.50. Now some people would just pay the $.50 but not me. The check was written for $28, it was their mistake, so I made them waive the fee. I will never have another JCPenney card. Ever. They were rude.
When you graduate, you are going to need a credit history if you want to rent (most) apartments, get a car, get a higher limit credit, etc.
The time to start building is now. Does your university have a credit union associated with it? (I’ve noticed they tend to be more lenient and willing to work with you than banks.)
@romanigypsyeyes Hmmm, that actually a good point! A higher limit would be better for any random emergency @ucbalumnus That’s what I’m saying. Unless I turn into a completely different person, I see a 0% chance that I would end up in credit card debt. I have been looking at tons of reviews from people who have gotten different student cards. Most of the people who got rejected for a student card said that the rejection happened because they had no credit.
Credit card with $200 credit limit is pretty unusable. It means that you can roughly charge only $100/month unless you pay multiple times per month. Even $500 limit that seems to be a standard minimum may be not enough in certain situations. At least you should be able to charge a plane ticket in an emergency. In college kids sometimes go out and one of them pays for everyone and then reimburse each other through Venmo.
It is unfortunate that your mother does not trust you. Any reasonable parent would prefer to start a kid on a credit card with a supervised account first. Ask her if she can function without a credit card.
@romanigypsyeyes There is a bank right on campus. I was actually going to open a 2nd bank account with this bank, so I can get bank statements. I need these banks statements to use as ID to vote in the state of Ohio, for the election
“It is unfortunate that your mother does not trust you. Any reasonable parent would prefer to start a kid on a credit card with a supervised account first. Ask her if she can function without a credit card.”
@CCDD14 No need to insult my mother. I’m not going to ask her that, it would just start an argument.
When you open up the bank account, inquire about getting a CC. I know there’s more strict laws since the 2009 credit card reform laws but I think you’d probably still be able to get a card of some sort- perhaps a secured one.
Be careful with the bank on campus. A few years ago several banks joined with colleges for naming rights to student ID’s and they made it oh, so easy to get paid from on campus jobs, refunds from over payment, loan proceeds. Except they had fees associated with them when you took the money out through ATM machines. Some have monthly fees on the accounts. Even if it is only $5/mo, that’s $60/yr. TCF and BankOne were the big ones. At my daughter’s school, they pushed accepting these cards so that refunds could go ‘right on the card’, but there is a $2-3 fee for ATM withdrawals. I just had it set up so that any refunds went to MY checking account. I paid for the meal plan but when she joined the sorority I had to pay them and get a refund from the college, so yes, my $2000 refund went back into my checking account.
Other daughter just set up her refunds to go to her credit union account, not onto the debit card her school offers, also with a use fee.
You definitely don’t need 3 cards to get a good credit score - my daughter had a score in the mid 700’s with a credit card, a debit card, and a bank account, with limited income (internships only - not year round).
I didn’t allow my kids to have CC until they were self supporting. They learned to manage their money and get credit history by me adding them to my credit cards. I provided my CC companies with their SS #, so my payment histories also went to their credit scores. I monitored their spend on my CC.
D2 just graduated from college this year, she just got her first credit card. She has $5000 credit limit. When D1 graduated she had a higher paying job, so she was able to get $20K+ credit limit. Neither one had a card in their names before graduation. When D1 signed for her first apartment in NYC, I didn’t have to co-sign. She was able to do it with her employment letter and her credit scores.
I have known a lot of my kids’ friends from college who had used their CC to buy the latest electronics. I think their intents originally was alway to pay their CC in full, but just couldn’t resist when they saw their friends with the latest Macs or iPhones.
No, I do not think it is necessary for students to have CC in their names until they have income (self supporting) to pay for it. Have a job, then you can get all the credits you want.
Are you sure you need a co-signer for Discover Student card? Both of my kids got a Discover card their sophomore year with no co-signer. It’s great because statement reports FICO score every month plus they give cash back on purchases. I was just on their website and it seems there’s also a $20 “good grades” bonus for GPA 3.0 and higher on the student credit card. Need to look into that! Did you actually apply for the Discover? You might want to call them and ask re: co-signer. I do think it’s really good to build some credit while in college. Plus it’s nice to have a card handy for an emergency. Good luck.
My son started with a Mobil Gas card while in high school. At 18 he got his own cell phone and at 20 he was able to secure a VISA. Right now, at 26 he was approved for a mortgage of $375K and is purchasing a townhouse. My D is a co-holder of a VISA, is getting a gas card sometime this week and in two years, at 21, she’ll get her own cell phone account. I expect that she’ll also have credit good enough at 26 to purchase her own home, assuming no wrenches are thrown in unexpectedly.
I’m a believer in learning how to manage your money as early as possible. Too many mid-20s can’t even purchase their own cars never mind their own houses.
Both my kids got a Discover CC while they were in college. No co-signing by me. Set it up to pay-in-full each month automatically so you never make a mistake. After they had that card for a year or so with good behavior, they were offered good deals on Visa/Mastercard which is more widely accepted. OP if you tell your mom you’ve got automatic full-payment set up, would that reassure her?
Both of my kids got CC before they left for college, neither were secured. My oldest DD started with a $300 max and I told her to put $50 on it every month and pay every month. Within 6 months, they raised the limit to $7000. Since her school is quite far from where we live, the higher limit is nice for emergency plane tickets, hotel rooms if needed.
@GreenTeaFanatic my kids both had college credit cards with very low credit lines…maybe $400. This was back when banks just gave them to everyone who got a college savings account.
They seldom used them, and paid them off each month.
In terms of an apartment, we parents had to be guarantors on both of their leases for their off campus junior year apartments because they didn’t have sufficient INCOME to be able to pay the rent.
Having a good credit rating is fine…but when you rent an apartment, you need to demonstrate that you have the income to pay the rent. In some markets, your incime needs to be 10-40 times the monthly rent.
I’ve had a credit card for 2.5 years and I really appreciate it. My dad took me to get a co-signed one when I was 19 so that I could start building credit, and so far it’s worked out pretty well. My credit limit is unusually high compared to the limits of most people on this thread–it started at 1k and now it’s 3k–but I’m hyper-aware of where my money goes and my average spending is closer to $250 a month.
My point is…having a credit card and a good credit rating isn’t going to help the OP get an apartment unless the OP has the income to support paying the bills.
Skimmed the discussion, sorry for repeat advice. You don’t need 3 cards.
My D has that Discover student card. She did not need a cosigner and it is not secured. The original limit was $500. She is responsible with using it, and now has a score in the mid 700s. D had savings when she applied, but I don’t think she even had a current job.
Look closely at secured cards before going that route, because many have fees (plus the “loss of use” of the security) that end up costing you unneccessary money to build your credit. Unless you have bad credit, you shouldn’t need a secured card. You should still be able to get an intro/student card with no credit history.
Build your credit while you’re in college. These days landlords and employers will run credit checks on you. You don’t want to graduate with no credit history. I bought a car as soon as I got my first real job out of college, at a low interest rate because I had good credit.
