Use Student Credit Cards to Build Your Credit Rating
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by: barrywaters
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Building a strong credit history is important. A great many accomplishments, from renting an apartment for the first time to buying your first new car to getting your first "real" job, require you to have good credit. Therefore, you need to build a good credit history and start as early as possible. Student credit cards are an important building block in establishing your credit history.
Begin by picking the right student credit cards. Student credit cards often have "gotchas" built into the contract, from low initial interest rates that convert into high rates after a grace period, to high hidden fees. Pick a credit card with the lowest possible interest rate and no surprises hidden in the table of fees.
Then learn how to use a credit card sensibly. Using the credit card to buy a small amount each month is a good idea as long as you pay the balance in full at the end of each cycle. (After all, it is hard to prove that you can use credit responsibly if you never get around to using your credit card.) If you let your balance roll over from one cycle to the next, reduce the amount of interest your account accrues by paying substantially more than the minimum payment each month.
If you use your student credit cards well, you will not reach your credit limit. However, emergencies do happen. If you find yourself nearing your credit limit, stop spending immediately. If you absolutely must exceed your limit, do everything in your power to pay back until you are under your limit as soon as possible. Most credit card companies will happily let you exceed your limit because the interest rates they can then charge you are exorbitant. Another side effect is that when you exceed your balance, a note may appear in your credit report, which will lower your credit rating.
Another essential step is always paying all of your bills on time. This includes not only your student credit card bills, but your utility and rent bills. Any bill that is late by a certain number of days (usually 30) can show up on your credit report as a black mark against you.
More of your future than you suspect will depend upon your credit report. It would be foolish to leave it to chance. Use student credit cards responsibly, establish an official record that you are a wise and sensible consumer who can handle his or her financial obligations, and lay a firm foundation for your future.
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