The one thing that almost all college students have in common is that is they are working towards getting a degree to qualify for a great job after they graduate. With a college degree you should have the knowledge and ability to apply for your dream career and have the confidence that you will succeed at it. But, besides your career, did you know there is also something else you will be working on for the rest for your life? Your credit score. A good credit score gives you more options than a bad score does. A good credit score can also save you a great deal of money over your lifetime as well. If you are still in college, you have the opportunity to get your credit score started correctly, and in a much easier way then if you wait until after you graduate.
Benefits of a Student Credit Card
A student credit card is just that, a credit card that is available to college students. Now, before you think that a credit card is not a good thing to have while in college, think about why you should get one. You are using it to build up your credit history and to get it as close to “excellent” as possible. An excellent credit score opens the door to a lot of options that you might need in the future. If you want to take out a loan for something such as a home, the bank or lender will check you credit score. The better your score the lower your interest rate will be. If you want to apply for a rewards credit card, then you will need to have good to excellent credit to qualify for one. Your credit score is a grade on how responsible you are with your money. By starting early, while you are in college, you will be just as prepared for your financial future as you are for the working world when you graduate.
Why Not Wait Until After College to Get a Credit Card?
Student credit cards are unique in the fact that, they are available only to college students. These cards usually have low spending limits, so it is difficult to accumulate too much debt if you are irresponsible. If you wait to apply for a credit card after college and you have no credit history, you will have a much harder time getting approved. Regular credit cards have credit score criteria that applicants have to meet in order to qualify. If you have no credit history, then your options for credit cards will be extremely limited. Your option might be going to your bank and applying for their basic credit card and see if you qualify, or you will have to get a secured credit card. Secured cards require you to deposit money up front in the case that you default on your payments. Since student credit cards are only available to college students, you have a much better chance to qualify, because the credit card companies know your situation as a student is much different than someone working full time. Your credit score takes time to build up. If you wait until after you graduate, you might have to push some of your financial goals back as well.
Having a Student Credit Card Doesn’t Mean You Have to Use It
Some people think that if they have a credit card they have to use it every time you spend money. This is not entirely true. To improve your credit score you need to show that you make some purchases on your card and that you pay it back on time. The amount of money does not matter. You could put one tank of gas in your car a month, pay it off, and you will be on your way to building credit. Or use your student credit card to buy your textbooks once a semester. The best way to approach a student credit card is to use it for money that you were going to spend anyway, and build your credit in the process. Also, a good number to keep in mind is to stay under 30% of your credit limit. The percentage of your credit limit that you use is a factor that goes into your credit score. If you have a credit limit of $500, you don’t want more than $150 on your card at any given time. Almost all college students have $150/month in expenses. Therefore, you are not using your student credit card to spend any more money than you were going to spend anyway. You are building up your credit history, which will end up saving yourself time and money in the future.
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