Credit history: What your college kid needs to know
Establishing a credit history is harder than it used to be 鈥� lenders are being听extra听cautious听with new applicants. If you鈥檙e applying for credit for the first time, here are some听tips听from the National Foundation for Credit Counseling:
鈥� Start slowly.听鈥淎pplying for too much credit at once can send the wrong signal to the lender, making it appear that you are desperate for credit,鈥� said the NFCC. Also, too many applications for credit cards can hurt your credit score.
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* Co-signer. If you have been denied credit, see if a听parent听or other relative will come aboard as a co-signer. Just remember, if you don鈥檛 make payments on time, you can damage the co-signer鈥檚 credit as well as your own.
* Three lines of credit.听鈥淵ou鈥檒l need at least three lines of credit, or else your file will be considered too thin for the all-important credit score to evaluate,鈥� said the NFCC. But avoid using more than 30 percent of your available credit.
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鈥� Variety.听The credit score algorithm likes to see different kinds of accounts. So don鈥檛 apply just for credit cards 鈥� when appropriate, also obtain a closed-end account, such as a car loan.
鈥� Secured credit card.听To get this kind of card, you put money in an account with an issuing bank and get a credit line for the same amount. 鈥淗andling this type of credit responsibly will likely lead to being offered an unsecured card,鈥� said the NFCC.
