5 Top Credit Tips for College Students

Photo (cc) by MJ/TR (´・ω・)

When Congress passed the CARD Act in 2009, everyone knew there would be loopholes. (In fact, Money Talks News detailed many of them in The CARD Act: What Congress Forgot to Fix.)

Some of those loopholes involved college students. The CARD Act made it tougher for those under 21 to get a credit card – and it worked. Sort of.

According to the Orlando Sentinel, in 2010, “49 percent of students said they owned a credit card, down from 76 percent of those questioned in 2009.”

But like some students, some credit companies are good at finding ways to bend the rules.

One example? The CARD Act requires students under 21 to prove they have the income to handle a credit card. But here’s the loophole: Some students reported their college loan debt as income and scored a card, The Wall Street Journal reported.

To hear more about what the law changed – and what it didn’t – watch the video below. Then read on for a recap and some debt-managing advice for students…

Getting extra credit

While the CARD Act may have reduced irresponsible credit card use, it’s also made establishing credit more difficult for responsible students – who need a strong credit score just like everybody else. Here are some ways students can still get a credit card:

  1. Prove your income. Students with steady jobs may make enough to satisfy lenders, whose rules vary.
  2. Get a co-signer. Anyone over 21 will do, but realize late payments can hurt both of you – and that your co-signer is responsible for your debt if you can’t pay it.
  3. Secured credit cards. These work like all credit cards should, but they come with a big catch: You have to set aside enough money in an account to pay off the maximum balance. Another drawback: Some have high fees, poor terms, and don’t report your timely payments. If you get one, make sure you sign up for a card that reports your payments to credit reporting agencies – that does help build your credit score. Check out our credit card search to find the best terms.

Making the grade

Once you get that credit, use it right – so it’ll still be available when you really need it. Employers, insurers, landlords, and obviously lenders (for car loans, home mortgages, and everything else) will take a close look at your history and base their rates and fees on what they see. Here’s how to make a good impression:

  1. Budget well. Keep track of due dates for your class assignments and your bills, and budget money better than your study time. Check 5 Steps to Building a Budget That Works.
  2. Start saving. Having a few months’ income tucked away for emergencies makes a big difference – it’s much better than having to put the expenses on a credit card. And if nothing goes wrong, great. You’ve got a down payment for an apartment, car, or money to pay down student loans and other debt. Check out 5 Steps to Saving More.
  3. Pay in full. To avoid interest charges and fees, don’t buy what you can’t afford to pay off each month. If you have to carry a balance, keep it below 30 percent of your credit limit – otherwise, your score will drop.
  4. Guard your credit. Don’t let anyone cheat off you. Monitor your credit score and be proactive in fighting identity theft. Check out 7 Ways to Prevent Identity Theft and 7 Steps to Recover.
  5. Know your score and how it breaks down. Get a free copy of your credit score so you can see how far you have to go. Understand the factors that matter most take the most work: A long credit history and steady on-time payments account for half your score. Another factor not yet mentioned is having multiple types of credit: Credit cards are open-ended, while installment loans – student, car, or mortgage loans – are closed. Lenders want to see you can manage both.

Unlike your test scores and grades, your credit score will be around the rest of your life – so take it seriously. Graduating soon? Check out 5 Resume Mistakes Grads Should Avoid.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
The 9 Best Home Insurers for Customer Satisfaction
The 9 Best Home Insurers for Customer Satisfaction

These are the only homeowners insurance companies to earn above-average scores for customer satisfaction.

How to Fix 6 Common Retirement Mistakes
How to Fix 6 Common Retirement Mistakes

Here’s how to strengthen your nest egg before or even during your golden years so these missteps don’t ruin your retirement.

7 Ways Anyone Can Cut Their Health Care Costs
7 Ways Anyone Can Cut Their Health Care Costs

Here’s how to lower your medical expenses without skimping on care.

Don’t Pay for These 10 Things: They Are Free With a Library Card
Don’t Pay for These 10 Things: They Are Free With a Library Card

Before you spend another dollar on items and services like these, check with your public library.

The 13 Worst Types of Tickets for Your Car Insurance Rate
The 13 Worst Types of Tickets for Your Car Insurance Rate

Some types of traffic violations can drive your car insurance rate dramatically higher.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

11 Products Now in Short Supply Due to the Pandemic
11 Products Now in Short Supply Due to the Pandemic

Many goods we take for granted have become tough to find in 2021.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.