Building Good Credit and Student Credit Cards
As a new international student in the United States, do you know if good credit history is important for you? The answer is, Yes!
As an international student, you might not see an importance of credit card. Most international students have financial aid or scholarship to pay for their education. However, emergencies in life come without warning and you need to be prepared. What if, you need some extra money for some unexpected events? In those times of need, a credit card and a good credit history can be more than a blessing.
There is a common misconception is that good credit history is needed only if you are planning to buy a house or a car. That is not true at all. Your credit history can determine whether you get a good job after you graduate, a decent apartment, a deal on your cell phone and reasonable rates on auto insurance. Most importantly, it can help you pay for your tuition or buy books, if the need may come.
Building a good credit history
A credit report is used by lenders to gauge your creditworthiness. However, it’s not just lenders. Landlords, employers, insurers and utility companies also check your credit score.
A credit report shows if you pay your bills on time, how much debt you have, what percentage of your credit is used, how many credit account you have and so on. In other words, it shows if you are managing your finances responsibly.
Three most important factors in building good credit report are:
- Whether you pay your bills on time. It's essential that you pay all your bills on time, all the time. Never, ever, late. Set up some kind of reminder system for yourself, if needed.
- How much of your available credit you actually use. You also do not want to max out any of your credit cards, or even get close.
- Finally, you don’t need to carry a balance on a credit card and pay high interest rate to build credit. Paying your bill in full each month is the best way to keep your finances in shape and build your credit at the same time.
Student Credit Card
There is never an easier time to get a credit card than while you are a college student. Credit card companies are willing to take risks with you because they know in few years you are going to be pay off your credit card and if not, they assume your parents will bail you out. Here are some examples of credit card that target college students.
- American Express® Blue Credit Card for Students
- AT&T Universal
- Bank of America
- Capital One Discover/Greenwood Trust Co.
- Wells Fargo Bank
Sometimes, it can be a frustrating process for an international student to get a credit card since they have no credit history at all. However, a good new is student credit cards are open to students who have lived in the United States before or for some time. Just wait, six months to a year, before you start applying for credit cards.
If you do not want to wait, you can always apply for a prepaid credit card. Get a prepaid credit card, use it often and refill it with cash every month. They will send your report to the credit bureau every month. Make sure that the card you get will have VISA or MasterCard logo on it. Following are a few links to some of the highest rated prepaid VISA / MasterCard Debit Cards.
Opening both checking and savings account and maintaining it for a few months can help you get a credit card as they show your ability to manage your assets and your ability to repay your card.
While applying for these cards, you need to be very cautious:
- You want a card with no annual fee or very low annual fee.
- Make sure it has low interest rate.
- AND just apply for one card. For now, all you need is one credit card. Applying for too many card in short span of time and make you look like a risky customer. Eventually, you will have more than one.
Get a store card
If you are being denied on credit cards, apply for a store card. Most departmental store issue charge cards. For example: Sears, Macy’s, Kohls, Sears, Target, Barnes and Nobles, Best Buy, all issue charge cards. It is easier to get those charge cards and help you build credit history thought they can’t be used anywhere else except that store.
Important tips:
- Don't charge more than 30% of the card's limit.
- It's much smarter to pay off your credit cards in full each month. You don't have to pay interest on a credit card to get good credit scores.
- Make sure you pay the bill, and all your other bills, on time.
- Maintain a checking and a saving account, both.
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