Building my credit was something I was trying to figure out how to do at 16 years old, so you can imagine my shock hearing my fellow seniors ask for suggestions on how to get started. For everyone who hasn't gotten started yet and could use a little help, this one's for you! Whether you're looking for information on building your credit or just using credit cards, hopefully, I can answer that all for you here.
When I bought my first car for my 17th birthday I bought it in full from a random guy on a buying/selling app. You know what that means, no warranties. Of course, within the first few months of owning it, the transmission became a serious issue and I had to spend a couple thousand dollars on a repair I couldn't afford. Luckily for me, my grandpa offered to finance to amount for me which allowed me to make monthly payments. By adding myself to the account as an authorized user I was able to start building credit before my 18th birthday.
Authorized Users: This is a great tip for high school students or for anyone who doesn't trust themselves with a credit card just yet. With most credit cards there's an option to add an authorized user, this typically means you'll share an account with someone, but have your own card. In this case, you can have someone, such as a parent, that can keep an eye on your activity and remind you when to do things like making payments. This option is probably the safest, easiest way to build credit.
Secured Credit Cards: A secured credit card works a lot like a prepaid card; you pay a deposit amount up front similar to a security deposit on rental spaces. The prepaid amount that you pay will be your credit limit on the card. This allows banks to approve people with poor or no credit for credit cards. This also allows the consumer to decide how high they want their credit limit to be. A secured credit card is another great option to start building your credit since there are no credit score requirements, you get to pick your limit, and you still get the perks of a normal credit card.
Student Credit Cards: Student credit cards are similar to secured credit cards since they are meant for people with very little credit info. Student credit cards will often have a lower credit limit, but they do often have good perks. It is important that when applying for your first credit card you look into options that are meant for people with no credit since applying for too many cards and consistently getting denied can have a negative impact on your credit score.
Discover Bank has a great student card with lots of perks the link I provide below is where you can apply. Stay tuned for my next blog post where I will explain more about the different types of perks that come with credit cards.
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