Is It Time to Upgrade My Student Credit Card?

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.