Credit history: What your college kid needs to know
Credit history starts sooner than you think: Your college kid has no credit and mounting credit card offers in the mail, so parents need to have the talk about the importance of a good credit history.
Credit history can start in college, or even before. Bankruptcy attorney Roy Kobert volunteers with CARE to teach financial literacy among high school and college students in Central Florida. He got involved after noticing debtors were getting younger and his own teenage son was getting credit card applications in the mail.
Amy Green/Orlando, Florida
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.