Between moving into the dorms and going to class, you’ve had all kinds of new experiences in college. And now you’d like one of those to be getting your first credit card. But doing so can be a catch-22. In order to get good terms and conditions on a credit card, you need a good credit history. But to establish a good credit history, you need to have a line of credit. So what’re you supposed to do?
“Many [college students] have a limited or no history of debt repayment on their credit report, which means that they are likely to have a very low credit score,” Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, said in an email. “[That] leaves young consumers with little room to shop around.”
There are also other limitations.
“The CARD Act of 2009 is a major influencer for many undergraduate college students who are applying for their first credit card,” McClary said. “The law limits access to credit cards for consumers below the age of 21, requiring them to find a willing adult co-signer or provide proof of their ability to repay the debt.”
But don’t throw in the towel. It is possible for college students, even those younger than 21, to get a credit card. In fact, there are a few different possibilities for you. (Just make sure to read the fine print before you sign up for any credit card so you understand the terms and conditions.)
1. Secured Credit Cards
“One option is to open a secured credit card, which doesn’t require a credit check but does require a cash deposit in order to open a line of credit,” McClary said. “If the creditor is reporting payment activity to each of the three major credit reporting agencies, these are good tools to establish a credit history that can open the door to better credit options if maintained properly.”
2. Student Credit Cards
There are also credit cards designed specifically with students in mind. (Here’s our roundup of the best student credit cards in America.)
“The benefits of a student card can include incentives like financial education and perks for continued on-time payment,” Robert Smith, a financial education specialist with Clearpoint Credit Counseling Solutions, said in an email. “Naturally, the credit limits are lower than regular credit cards, but they do assist students with the establishment of credit, which could be vital upon graduation as they seek employment, major purchases and their first apartments.”
3. Credit Cards With a Co-Signer
This isn’t a type of credit card, per se, but if you have someone older than 21 willing to co-sign a credit card application with you, this may be a viable option. If they co-sign with you, they would be on the hook if you can’t make your credit card payments.
“The co-signer would have to have a healthy credit score to help you gain access to the most prime credit products with the lowest fees,” McClary said. “If it all works out, it’s like going straight to the head of the line at an exclusive VIP club. If you use the credit responsibly, you can stay in the club. If not, you get kicked out and it can take a while before they welcome you back.”
Building Credit the Smart Way
No matter which type of card you ultimately choose, it’s important you use it responsibly. Building and maintaining good credit can benefit you when it comes time to get your next credit card or apply for a loan in the future. It’s a good idea to monitor your credit so you can see how your payment history and debt usage are affecting you. You can see two of your credit scores for free, updated every 14 days, on Credit.com.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- An Expert Guide to Credit Cards With Rewards
- How Secured Cards Can Help Build Credit