Home > Credit Cards > Is It Time to Upgrade My Student Credit Card?

Comments 0 Comments

College students looking to build credit often have limited options when it comes to credit cards. For starters, the Credit Card Accountability Responsibility and Disclosure Act of 2009 stipulates that lenders can’t issue cards to consumers under 21 unless a borrower has shown he has the ability to repay back his debt or has a willing co-signer. Young people who meet those requirements are often relegated to secured credit cards or student credit cards, which typically feature low credit limits, little to no rewards and higher fee structures.

But if you’ve been using your entry-level credit card since school started, is it time for a better piece of plastic? That all depends on how you’ve been using it.

If you’ve established a good record, you might want to call your issuer and ask about an upgrade soon, said Mike Sullivan, director of education for Take Charge America, a credit counseling service based in Phoenix. Secured credit card issuers — who require borrowers to back credit limits with their own cash — will let you move to a more traditional one “typically after six months,” he said. Student credit card issuers may also agree to up your credit limit within the same timeframe.

You may try to upgrade after returning from winter break, but don’t look to raise the limit (or add other bells and whistles) just to spend more. Instead, you should “increase the amount of your credit availability in order to improve your credit score,” Sullivan said. The amount of debt you carry is a huge factor in credit scores. It’s generally recommended that you keep this number below 30% (or ideally 10%) on individual and collective cards for the best results. Having a high credit limit  — especially on the only card in your wallet —  can make it easier to hit those numbers, so in some cases it’s a smart move for new borrowers to request one.

It’s not as smart if you’re prone to overspending or missing credit card payments. In fact, if that’s the case, you probably won’t be approved. “If you use your card badly, you establish a low credit rating, so you’re not going to get credit on favorable terms,” Sullivan warned. Students having a hard time managing their plastic should focus on rebuilding their credit, keeping credit balances low and credit inquiries (aka applications for credit) to a minimum.

How to Establish Credit When You Have None

If you’ve yet to establish a credit history, don’t fret too much, Sullivan said. At the very least, your student loan will help you build credit once you start making payments after graduation. Meanwhile, students can see if a parent or guardian will make them an authorized user on their credit card account. Parental supervision can be helpful while learning to responsibly manage an account. You’ll get credit for using their card, so long as the issuer reports this to the three major credit reporting bureaus.

Over time, you may want to bolster your credit by applying for a personal loan, Sullivan added. Just be sure to research any financing terms and conditions, because you don’t want to take on a loan you can’t afford to repay. Of course, it’s a good idea to track your credit as you go. You can pull your free annual credit reports at AnnualCreditReport.com or view your credit scores for free each month on Credit.com.

More on Credit Cards:

Image: DigitalVision

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team