Making and Maintaining Credit in College

How many pre-approved credit card offers do you get in the mail each day? If you're a college age student or the parent of one, probably dozens. College students are prime targets for credit card companies. They are the ultimate consumers and they most of them haven't learned the meaning of restraint or money management. Here are some tips to building good credit while you're in college and maintaining through and after college.

Bank Accounts
Set up a checking and a savings account. This will get you in the door to getting credit. Strangely enough, credit cards help you build credit... but when applying for a credit card, the credit card company does a credit check to make sure you qualify. If you have no credit, that's kind of hard. Having bank account records that you can point to will be useful. That is, as long as you use them wisely. Create a history of regular deposits into your savings account and try to keep your balances at a reasonable level and don't bounce any checks.

The Card
Apply for your first card before you go to college. While $5,000+ limits are tempting, insist that you receive a low credit limit. My advice is $750 or less. It may not sound like much but once you're making tuition payments, $750 of debt can feel overwhelming.

Limit yourself to one card. You don't honestly need more than one. If you are careful with your spending hopefully you won't have to use your credit card that often. Your credit card should be used for emergencies and items that you don't have the cash to pay for right now, but you will at the end of the month. Try to limit yourself to necesities. Yes, it's harsh, bu that's the college student's way of life.

Limit your spending! Don't overuse the card. Lots and lots of use can actually hurt your credit score. Be careful. Wait 48 hours before buying anything you want and if you still absolutely must have it and you still think it's a good idea, then buy it.

Shop around for your credit card. Ideally, look for a card with a low interest rate and for one that's forgiving when it comes to late payments etc.

Make your payments on time every month. Some people recommend paying off your credit card at the end of each month, but this strategy does not help you to build credit as well. The credit card companies don't like that because then you are not paying interest and they are not making money off of you. If you've got a low balance and a low interest rate, your interest charges will not be that much anyways.

Be sure that you have the income to make your payments i.e. get a job. This also helps to build your credit history. The next time you have to ask for a loan a steady employment history will be a plus for you.

Loans
If you are like many college students it is likely that you've taken out a student loan. Pay off the interest while you're in school. This will make your payments after college smaller. The interest that accrues while you are in school eventually gets added to the loan when you graduate and then interest accrues on the now greatly enlarged principle.

Once again, a steady employment history will help you whenever you are applying for a car loan or a mortgage so get a job and keep it.