 "Photo: Maura Ochoa / Staff Photographer")
A credit score may appear to be a small, three-digit number, but it’s powerful enough to make or break a consumer’s application to buy a new house, purchase a car or set up a cell phone plan. This is the number used by lenders to determine how trustworthy people are in paying off their debt. A good credit score decreases the interest rate on a loan or the premium on insurance.
Building a credit history usually begins in college. It’s relatively easy to apply for credit cards or loans as a student, as lenders know parents are usually there to help pay the debt if it becomes necessary. Credit history takes time to build.
Students usually start with a secured card. Most financial advisers reccomend staying well within the credit limit. Paying utility bills, such as San Diego Gas & Electric and Internet service providers, also contributes toward building a credit history. It’s important to be mindful of due dates, because late payments can ruin a credit score.
Many companies offer credit cards to students who lack credit history and are trying to establish their first line of credit. Individuals can choose from among companies and offers based on their specific spending habits.
For example, Bank of America is one company that provides credit cards to students without credit history who are looking for their first card. Their student card has no annual fee and comes with what the bank calls Total Security Protection, which helps ensure that students don’t have to pay for transactions they didn’t authorize, if their card is stolen.
If someone is a regular Internet shopper, then Discover’s More card could be an ideal choice. The card has a 5 to 20 percent cash back bonus for products purchased through its exclusive online shopping site. The card has zero percent annual percentage rate for the first six months, and 5 percent cash back in categories such as gas, groceries and travel.
The Chase student credit card offers reward points with friends online through Facebook and allows points to be donated toward supporting a cause. It rewards students for paying bills regularly by giving them points for each timely payment.
For students who spend a lot of money on entertainment, the Citi Forward Vista Card is a good option. Students earn five reward points for every dollar spent on books, movies, music and restaurants. The program also includes a .25 percent APR reduction for staying below the credit limit and paying three consecutive bills on time.
Caution and prudence is still required. While credit card companies lend money somewhat easily, students often forget they have to pay that money back later. Many spend more than they can afford, and their debt accumulates to a point of major financial trouble. If students don’t learn to use credit cards judiciously, they contribute to their own debt, and that of the nation.
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