Charge Accounts Help Students Establish Credit

Establishing credit when you are young invokes the classic Catch-22 situation. Most creditors dont want to hand out credit cards to people that dont have good credit histories. Buf if the only way to get credit is to have it already, what can you do? For college students, the answer is often quite simple fill out the credit card applications that seem to be just about everywhere. For some reason, credit card companies are willing to be a lot more forgiving about handing out credit to novices if they are enrolled in college.

Tens of thousands of college students take advantage of this situation every year, mostly to their own detriment. By the time the average student finishes college, he or she has a credit card debt of nearly $3000. Worse, there is probably a credit history that shows an occasional note of a late or missed payment. These are not the sorts of notes you want to have on your credit report when you are just entering the working world, but that is how it is for a lot of graduates today.

Does this mean that acquiring credit while in college is a bad idea? Far from it. In fact, obtaining credit cards while in school is a great idea, if you go about it the right way. Its a great opportunity to establish credit and good spending habits. If you are a college student, you should go ahead and apply for a couple of credit cards while you are in school. Once you get them, you should use them regularly. What you should not do is use them recklessly. Use them for the occasional expense that you might otherwise pay for with cash a meal, a movie, or a DVD. When the bill comes, pay it promptly and pay it in full. You should do this every month with each of your credit cards.

What this does is establish both a spending and a payment history. You can demonstrate to the credit card companies that you are capable of both using the card responsibly and making your payments on time and in full. This will, over a year or so, help you establish a credit score as well as a history of good payment. That, in turn, will come in handy later when you want to take out a loan to buy a car or even a home.

Many college students squander a good opportunity to establish credit by using their credit cards to run up huge balances they cannot pay. Dont get stuck in that trap; use credit cards as a tool to build your credit score.

Copyright 2007 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing , a firm devoted to informational Websites, including The-Debt-Consolidator.com, a site about debt consolidation, credit counseling, payday loans and personal bankruptcy.