Credit scores are vastly important numbers. They’ll affect the rate you get if you’re refinancing student loans, getting a mortgage, or shopping for an auto loan. But, it’s even more than that. Employers and landlords both often pull your credit report before hiring or allowing you to live there. This is why it’s imperative to build your credit early. It may save you thousands and thousands in the future, help you land a better job, and get you into a better apartment. Credit score can even affect your car insurance costs. You can read how I went from no credit to excellent in a year.
This post is not going to get into the nitty-gritty of how a credit score is determined. My advice targets specific points of the calculations and will work. If you want to know why, you’ll want to research how a FICO score is determined. If you are not responsible enough to resist spending more than you have and paying off your balance every month, do not get a credit card.
Student Credit Cards
The first step would be to get a good student credit card. These are generally pretty easy to get if you’re starting without a credit score. If you’ve already tanked your credit, you’re going to want a secured card instead. Discover has a great secured card and a great student card and is basically a lock if you apply for their card. You can get an extra $50 after your first purchase using this link. Discover has by far the best benefits for your first card. Your rewards are doubled after the first year, making the cashback great.
Discover is a great card, but not every place accepts them. Plus, with the way your score is calculated, you’ll want to get multiple no annual fee credit cards early into your credit history. Another good option is the Deserve Student MasterCard. They give a pretty generous credit limit, offer 1% cashback, pay for 1 year of Amazon Prime, and will give you $30 after your first purchase. They also have no foreign transaction fee, which is great if you decide to study abroad. I highly recommend this card and you’re almost guaranteed to be approved. For the extra $30, sign up here.
There are more student cards out there, but I can’t personally recommend them. Deserve and Discover are the easiest to get approved and offer rewards without annual fees. They’re by far the best two to apply for.
Other Credit Cards
As long as you don’t plan on applying for an auto loan, mortgage, or refinance in the next 12 months, there is no real harm to applying for more credit and in the long run, it can only help. Just make sure you’re not paying an annual fee for any of your cards and always set up autopay to pay off your full balance every month so that it doesn’t cost you anything. The other cards I got in my first year of credit history was the Target Redcard (for 5% off anything at Target, which is very handy as a college student), A Visa from my local credit union (I had been a member for about two years, and got a $5,000 limit right off the bat which really helped my credit), a PayPal Credit Line (technically not a card, but reports in the same way. Plus, it will never close, so will always help my credit), PayPal Cashback card, and Amex Blue Cash Everyday. Depending on your income, it may be hard for you to get more than 5 cards in the first 6 months to a year and that’s fine.
Lots of people recommend Self-Lender and it will help your credit, but there is no reason for anyone to pay more money just to improve their credit. So I don’t really recommend it. There are also really crappy cards such as Petal Visa, high annual fee cards, etc. Don’t fall into this trap. You’ll end up paying for a slight increase in credit that you could have gotten for free.
The only other good option to help build your credit is being added as an authorized user on your parents’ card(s). This is only helpful if they make their payments every month. Otherwise, it could hurt your credit. So, if you go this route, make sure their payment history is 100%.