Many college students have been turning to specific credit cards in order to build their credit history and increase their credit score while in school. The notion of a student credit card often has a negative stigma attached as many card companies would, in the past, offer students a seemingly great deal on a credit card only to sneak in unfair rates or fees which caused many students a great deal of financial trouble and debt.
However, secured credit cards and other forms of student credit cards have been a way in which college students have been able to build a credit history which can be beneficial in the future. While new credit card laws have required that college students be of a certain age or have a cosigner when obtaining a credit card, there are cards available that can be helpful for a student who is responsible and simply wants to begin building a positive credit history.
For instance, secured credit cards are one means which students use credit to their advantage as these cards can be obtained by bad credit borrowers with the purposes of repairing a poor credit score and history. A secured credit card requires the deposit of a sum of money into a bank account, which will set the credit limit and secure the bank if the cardholder defaults or simply misses payments. These cards, which are often used by bad credit borrowers, can be useful to students who have little to no credit history.
While it’s not overly common that college students worry about their credit history or credit score, there are those who are looking past graduation and thinking about buying a car or a home once they get established into a career. Obviously, by beginning one’s credit history early there is a higher likelihood that a better credit score can be developed, since a longer credit history will be established and a student’s financial situation will benefit if both their credit history and credit score show responsible use of credit.
Student credit cards or secured credit cards, while they can be a valuable tool, are not guaranteed to increase one’s credit score. However, when students have used these cards properly, meaning they have made responsible financial decisions and purchases, and promptly paid off their charges from month to month so that interest rates will not allow their debts to get out of control, many college students have built a decent credit history and credit score by the time they graduate, which has been helpful in establishing a firmer financial foundation for later in life.