student credit cards

Student Lounge College Life
21

<p>
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Skooliscool: I dont believe that, sorry.

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<p>[url=<a href="http://img419.imageshack.us/img419/4499/acctsummary9pp.jpg%5Dproof%5B/url"&gt;http://img419.imageshack.us/img419/4499/acctsummary9pp.jpg]proof[/url&lt;/a&gt;]
[url=<a href="http://img387.imageshack.us/img387/37/cards2zb.jpg%5Dproof%5B/url"&gt;http://img387.imageshack.us/img387/37/cards2zb.jpg]proof[/url&lt;/a&gt;] (and yes those BofA are credit cards, not check cards)
[url=<a href="http://img419.imageshack.us/img419/880/fico4br.jpg%5Dproof%5B/url"&gt;http://img419.imageshack.us/img419/880/fico4br.jpg]proof[/url&lt;/a&gt;] (ok, so not all 715, but they were until I updated 5 mins ago --EX and TU dropped a few points from opening a new account, but they rebound in no time. --and my scores would be 750+ if it wasn't for my short 3yr history)</p>

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<p>Note that there have already been several threads on credit cards and credit scores.</p>

<p>"Having numerous Credit cards hurts your credit score, and so does applying for them."</p>

<p>While applying for too much credit DOES hurt your credit score, having too many credit cards DOES NOT. In fact, it generally helps your score by dropping your credit utilization.</p>

<p>"what are the keyfactors i getting the score UP. Ive only had my card for about 1.6 years so far."</p>

<p>The major thing that's going to drag down your score is the length of your credit history--that's always the primary problem for students--and there's nothing you can do about that other than be patient and wait.</p>

<p>There are a lot of things that go into your credit score, but the two major things that you should pay attention to are late payments and your credit utilization. Never pay late, and try not to carry a balance more than 50% of your available credit (note that you don't necessarily have to have a 0% utilization to have good credit).</p>

<p>Additionally, when you apply for new credit (or get car insurance in most states or apply for an apartment), someone checks your credit. This is called a "hard pull" (when someone other than you looks you up) and this remains on your report for two years. Having 2 or more hard pulls will drop your score, though not a great deal (this is why your score dropped when applying for a new loan). Note that is does not matter whether or not you are actually approved for credit.</p>

<p>The type of debt that you carry can also have an effect on your score. There are certain types of debt that are preferred--at least two major credit cards, student loans and a mortgage are considered healthy forms of debt. Store credit cards--cards from Best Buy, Sears, etc.--are considered "bad." Taking out a private student loan and paying on time will help your score greatly.</p>

<p>"Is it ok to cancel credit cards and then get a new one."</p>

<p>This is equivelent to shooting yourself in the foot. Unless there is an annual fee, there is often no reason to cancel a card. When you close an account, you decrease your credit utilization (since your available credit decreases). Subsequently applying for a new card will ding your credit when they check your credit report.</p>

<p>Additionally, your credit history length will decrease--one of the measures of credit history that credit agencies use is the average age of your accounts. If you close an older card and then open a new one, your average ago will drop quite a bit (although you don't have much history as it is).</p>

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<p>From what I've been told, even though it is important and it helps your credit score to make payments on time your salary is what really matters when you have to take out a big loan such as getting a house. And it makes sense to me at least, I mean you can make all the payments you want on time but if you want to buy a house and you don't have the salary then it's going to be pretty tough to get one.</p>

<p>I don't technically have a credit card but about a month ago I saw an offer on Amazon that gave you discounts and points for buying on their site. So I ended up getting the card and it was approved for my mom but my mom simply gave it to me to use. It's not co-signed and it's not under my name but it'll let me experience what it's like to have a credit card.</p>

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<p>"From what I've been told, even though it is important and it helps your credit score to make payments on time your salary is what really matters when you have to take out a big loan such as getting a house. And it makes sense to me at least, I mean you can make all the payments you want on time but if you want to buy a house and you don't have the salary then it's going to be pretty tough to get one."</p>

<p>This is actually a pretty important point--your credit score is only one measure of your credit worthiness and not everyone uses it. Your "real" credit score is the score you get from myfico.com (the scores that everyone's been getting from TU, Experian and Equifax are proprietary scores using a formula different from the one used when calculating your score when a hard pull is done), but some creditors will ignore the score and use the information contained in the report (and information you provide, like how long you've been at your job and your annual salary) to calculate their own score.</p>

<p>Note, however, that making on-time payments is still extremely important--even if you have an extremely high salary, you're going to end up having to pay a higher rate of interest if your payment history is erratic. This is actually more common than many people would think (at least in my experience in working for a CPA firm) with a lot of finance professionals (like investment bankers) and medical doctors--they are great at what they do, but TERRIBLE at managing their own money. As a result, despite pulling in hundreds of thousands (in some cases, millions) of dollars a year, many have horrendous credit scores and are paying obnoxious interest rates on their debt.</p>

25

<p>hey i got a question regarding student loans, well really loans in general.</p>

<p>does it look good if you take out loans even though you know you have the money? what I mean, is say I take out student loans if I were able to pay off the student loans right away, after graduating would it look good on my credit history and credit report? would it look good I bought out real cheap items, charged it to a credit card, and paid it off right away? the idea is you have the money but still use the card just so you can add to your credit score and credit history. does this work?</p>

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<p>Taking out a loan and paying it off immediately doesn't do anything to help you, as you won't have the long history of on-time payments. Creditors aren't just looking for the ability to pay--they are looking for the ability AND the willingness to pay. Having those on-time payments demonstrates that.</p>

<p>It is good to use your credit card, however--just make sure that you pay it off after you receive your statement. If you pay it off before your statement date, a $0 balance will be reported to the credit reporting agencies and it will look like you never used the card. You won't incur any costs in doing this assuming you make the payment within your grace period (usually between 20-30 days from the date of purchase).</p>

<p>It's good to use your credit card and pay it off later for a few reasons:
1. Your cash will sit in your bank account longer and earn more interest
2. It's easier to keep track of your spending
3. If you have a cash back feature on your card, you can actually make money doing this
4. It's easier to manage your cash and safer to not carry so much of it around
5. Credit cards afford a lot of protection (you can dispute charges if necessary and your purchases are insured)
6. Risk of loss from theft is minimal, which is not the case with cash and debit cards</p>

27

<ol>
<li>I'm actually going to avoid putting money in my bank account. My parents will do the same while I'm in college. The reason for that is that we don't want any of that to go against us when I have to fill out the FAFSA. On top of that, the interests on the accounts are real low usually so it's not like I'd be making much anyways. Although if I were to get a CD or something of that nature then things change, I'm not sure if that's what you're referring to.</li>
<li>If you're good with tracking payments that are due and calculating what you can afford to pay off and what you can't afford not to pay off then doesn't it make sense to get rid of one payment altogher? Say I have Items A,B,C,D,E to pay but I can pay off items D and E right away only while still being able to pay the min or a bit above the min on items A,B,C wouldn't it just make sense to get rid of as many items as quick as possible?</li>
<li>Never heard of the cash back feature on a credit card. What is this?</li>
<li>I can see where it's safer definitely.</li>
<li>What kind of protection? I understand things are insured when you buy them but what other kind of protection is there?</li>
<li>Tell me about it. My dad has had his credit card number stolen a couple of times. He's called up the credit card company as soon as he saw the weird items on his monthly statement and they reviewed the case and he didn't have to pay any of those items.</li>
</ol>

<p>Btw when I say paying off the loans quickly, I mean after receiving the statement. As far as I know if you pay it about 1-2 weeks after receiving the statement you don't get charged interests which is what I don't want to pay.</p>

<p>Also it seems to me that the willingness to pay translates into making sure that you pay interests when you take loans out. I am not looking to pay off my loans in a 10-year period because that's just ridiculous, especially after looking at the amount of interests the bank would get. Sure over time it's not a great deal but it's money I save myself. I understand how having a long history of on-time payments would help but this is just ridiculous and seems like another way to just make sure you pay interest.</p>

<p>Here's another question. What if you took out loans each money knowing you could pay it off each month, and you proceeded to do this for a year or two, would this help your credit score? For example, in Janurary I charge item A to my card, then pay it off after I receive the statement which means I did this on-time but paid no interest. And I do the same thing each month for a while. Does this help? Is this a way to show your ability AND willingness to pay (more so willingness than anything else)?</p>

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<p>"Btw when I say paying off the loans quickly, I mean after receiving the statement. As far as I know if you pay it about 1-2 weeks after receiving the statement you don't get charged interests which is what I don't want to pay."</p>

<p>You seem to be confusing loans (installment accounts) and credit cards (revolving accounts). Credit cards have a grace period (starting from the date the item was charged, NOT the date you receive the statement listing the charge) and if you pay within it, you won't get charged interest; however, loans can come with upfront fees (or fees upon repayment) and interest usually accrues upon disbursement. </p>

<p>"Also it seems to me that the willingness to pay translates into making sure that you pay interests when you take loans out. I am not looking to pay off my loans in a 10-year period because that's just ridiculous, especially after looking at the amount of interests the bank would get. Sure over time it's not a great deal but it's money I save myself. I understand how having a long history of on-time payments would help but this is just ridiculous and seems like another way to just make sure you pay interest."</p>

<p>If you don't need to take out a loan, then why would you? If it's to improve you're credit--why are you so worried about your credit if you don't need any credit?</p>

<ol>
<li><p>That comment wasn't specific to you--it's a general rule of thumb that it's better to pay later and receive earlier.</p></li>
<li><p>I'm a little confused as to what you mean by "items." All I was saying was that it's easier to keep track of what you're spending your money on. If you purchase things in cash, the only way to know what you purchased this past month is to keep receipts for everything. If you use a credit card, you get a nice little statement listing where you spent your money.</p></li>
<li><p>Some cards will, as an incentive, give you 1% of all of your purchases back to you. So, if you spend $1,000 on your credit card and pay it off before your grace period ends, you walk away with $10 and don't pay the credit card company anything.</p></li>
<li><p>It's a bit beyond what you need to know, as there are a lot of legal details and the extent of your protection can vary from bank to bank, but it's quite a bit harder to get ripped off when you pay by credit card. If you purchase something online, for instance, and the company never sends you the item (or sends an item that doesn't work), you can easily call your credit card and dispute the charges.</p></li>
<li><p>You sort of explained it yourself. If your credit card is stolen, the process isn't too painful to fix the charges. If cash is stolen, it's probably gone forever. If your debit card it stolen, you'll probably get the money back (it depends on your bank), but the cash will have temporarily left your account and could result in all kinds of headaches (such as bounced checks).</p></li>
</ol>

<p>"Here's another question. What if you took out loans each money knowing you could pay it off each month, and you proceeded to do this for a year or two, would this help your credit score? For example, in Janurary I charge item A to my card, then pay it off after I receive the statement which means I did this on-time but paid no interest. And I do the same thing each month for a while. Does this help? Is this a way to show your ability AND willingness to pay (more so willingness than anything else)?"</p>

<p>Yes, but you're not taking out loans--you're charging things to your credit card. There's a big difference and your credit wouldn't be as strong as someone who had a history of paying both student loan and credit card payments on-time.</p>

29

<p>D'oh!!!</p>

<p>You're right. I am confusing the two. I always figured charging something to a credit card is like taking out a loan because you are technically borrowing money from the credit card company. With that cleared up, does it help to pay off credit card payments as soon as possible or is paying the min a best option in order to show your ability your willingness to pay? Or is this completely irrelevant to credit cards, and only applies to loans?</p>

<p>Btw, what happens if you don't get the statement on your credit card within the grace period? How could you know what you owe if you've made a lot of purchases? Would credit card companies purposely mail the statement after the grace period?</p>

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<p>The short answer: if you can pay your credit card off, do it. Don't extend payments just to build credit.</p>

<p>Just about every credit card company and bank now has a website where you can check your balance and make payments (some even offer incentives to get you to use their website and opt to not receive paper statements). If not, you can also call them and get your balance and current minimum payment due.</p>

31

<p>I'll have to look into that then.</p>

<p>Now just to make sure I'm clear on this, for regular loans that have installment accounts setup it is better to pay it off as it says instead of paying it off right away? Is it even recommended to pay it off early if you can, like say 2-3 years earlier on what was originally a 10-year plan? And with credit cards it's the other way around, it's better to pay off right away, after it's on the statement?</p>

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<p>If you can pay off your debt, pay it off. While you do want to build credit if you can, it doesn't make any sense to do it the way you're thinking. Don't go into debt if you don't have to.</p>

<p>Also, you may not have the option to pay off your loan early without a penalty--terms vary from loan to loan.</p>

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<p>proof
proof (and yes those BofA are credit cards, not check cards)
proof (ok, so not all 715, but they were until I updated 5 mins ago --EX and TU dropped a few points from opening a new account, but they rebound in no time. --and my scores would be 750+ if it wasn't for my short 3yr history)</p>

<p>AMEX Platinum my ass. Real ballers have AMEX Black card.</p>

34

<p><a href="http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf%5B/url%5D"&gt;http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf&lt;/a&gt;&lt;/p>

35

<p>I just use a debit card - you just draw from money that is already there, so no worries about debt, and you can use it like a credit card, so the convinience remains.</p>

36

<p>"I just use a debit card - you just draw from money that is already there, so no worries about debt, and you can use it like a credit card, so the convinience remains."</p>

<p>Two problems, however: First, you don't build credit using a debit card, which can cause problems for you after graduation. Second, it is rather dangerous to use a debit card for anything other than ATM withdawls (see <a href="http://talk.collegeconfidential.com/showthread.php?t=169182&highlight=credit%5B/url%5D"&gt;http://talk.collegeconfidential.com/showthread.php?t=169182&highlight=credit&lt;/a> )</p>

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<p>Some of the comments posted here are plain wrong. If you're reading these, please take them at face value and do real research to get real information from reputable sources.</p>

38

<p>^ Yeah but some are correct. I probably would be careful who I take credit advice from on a high school board, but there are some of us who know quite a bit about credit.
But certainly, do your research.</p>

<p>Might I suggest www . creditboards . com / forums</p>

39

<p>Not that I disagree with the idea of people doing their own research, but what exactly are you objecting to?</p>

<p>I would also recommend the finance forum at <a href="http://www.fatwallet.com%5B/url%5D"&gt;www.fatwallet.com&lt;/a&gt;&lt;/p>

40

<p>wait, i have a question
i have a bank of america visa card, with the bill due on the 22nd of each month</p>

<p>i use the online bill pay thing to pay it off, and usually tell it to deliver the payment on the 19th or 20th. i always pay my bill in full. should i be telling it to pay on the 22nd? aside from losing a few cents of interest per month, is this hurting me?</p>