Some parents rue the day their college student decides to apply for a credit card. College can be a liberating experience and, for some college students, new-found financial independence can quickly get to their head, resulting in the type of high debt levels that can ruin a good credit score. However, there are ways for college students to apply for a credit card without destroying their credit reports and scores in the process. After all, having a credit card could help students build up their good credit score if used correctly.
Applying for a credit card in college
It’s not difficult for college students to come across a credit card offer — many receive several in the mail each week. Some are student credit cards, designed specifically for the younger consumer in mind and marketed with rewards and offers that might appeal to a college student. While it may seem simple to pick up one of these offers, fill it out and send it back, parents should work with their college student to ensure they are picking the right card.
Best practices to keep in mind:
- Read the rate information carefully — Some credit card companies offer low introductory interest rates that may escalate down the line. Parents and students should know exactly how high the interest rate might climb on a credit card to avoid scenarios in which an individual’s good credit score was damaged by unmanageable debt.
- Avoid annual fees — Some cards charge exorbitant annual fees for any number of conditions — such as actually having the physical card. College students should opt for credit cards that guarantee no annual fees because they might help them avoid excessive debt in the long run.
- Check consumer ratings — Top consumer review services provide details on credit card terms, offers and benefits. College students and their parents should compare each and stick with cards that have received top ratings for consumer-friendliness.
Tips for building and maintaining a good credit score
Once they have a credit card in hand, students should take a few steps to avoid credit score damage.
- Keep up with credit reports and scores — Checking this information can be the first step in identifying risk factors for potential harm to their credit score and even identity theft.
- Make timely payments — College students should get in the habit of paying their credit card bill on time. When possible, it can also help to pay off the balance in full to avoid accrued interest and higher debt.
- Stay within buying limits — Most of all, students should avoid the type of impulse shopping that can lead to credit score damage. Credit cards should only be used for payments that can be paid off quickly or for emergencies.