Comments on: Financial Management: Jump Start Your Credit History

By: Marc

Marc — Thu, 12 Feb 2009 11:26:27 +0000

I think that this is a good well-rounded article, as it’s important for people to be educated about debt as early as possible. Also, there’s a difference between good, well managed debt, and bad debt! It seems that there’s a big problem when too many young people dig themselves into a hole with credit that they don’t think about enough, especially if their parents never discussed good finance with them openly. It should be a basic topic taught at school.

I’m a British student who’s turning 21 this month, I have one student credit card and I always pay it in full each month — however I often go beyond the “about 30% of limit” rule, which I will now try to avoid. So if it’s £250 then I think I’ll not spend any more than £80 each month. I’m glad that I have a state-subsidised student loan though, which avoids commercial loan rates as it’s based on the rate of inflation. It’s better to obtain all the credit that I can get at this low rate (in addition to the grants and bursaries, of course!) and simply save what I don’t spend (I actually spend a lot less than most students I know it seems, mostly because I live at home at the moment — but I’m also “sensible” with gambling, alcohol etc). Although with the pitiful interest rates on savings accounts at the moment, and the risk of “quantitive easing” (i.e. “printing money”) from the Bank of England leading to high inflation, I hope my small savings aren’t devalued further…

At the end of the day, though, I don’t work yet, and I don’t spend beyond my means.

By: Kelley Mitchell

Kelley Mitchell — Thu, 05 Feb 2009 19:07:36 +0000

I had already planned on having my son get a credit card from our credit union when he turned 18. I know the length of time on having credit is important. We had him sign up for his bank account when he turned 13. The problem was I knew it would be useless to just have a credit card and not use (as far as credit scores are concerned), so I really like your Simple Strategy:

“Obtain a student credit card and charge your monthly cell phone, cable, or gym membership bills to it. Sign up for your checking account’s online account and set the bill pay feature to automatically pay your credit card every month. Put away your credit card and don’t use it. Voilà . You’re now building credit in your sleep.”

By: MBarger

MBarger — Wed, 19 Nov 2008 19:37:23 +0000

I can’t believe that this is at this site. There are plenty of ways to up your credit scored honestly and without any cost. It does however take time. There is no magic fix!

By: everest college online

everest college online — Sat, 25 Oct 2008 20:59:25 +0000

Everest University Online offers multiple learning paths to get your degree completed!

By: Credit Card Balance Transfers: Pros, Cons and Caveats »

Credit Card Balance Transfers: Pros, Cons and Caveats » — Tue, 05 Feb 2008 17:00:59 +0000

[...] For a new credit card and ideal intro rates, you need good credit. Just applying for the offer doesn’t guarantee you’ll lock in intro rates, especially if your credit is bad. If it is, and they still grant you a card, you’ll have higher interest rates and it won’t be worth it. For tips on repairing and building credit read Building Credit While Your Young. [...]

By: DPLer

DPLer — Wed, 12 Sep 2007 18:31:53 +0000

Joint accounts? I worked for Citi for a couple of years and the only joint accounts belonged to elderly people. I did not think banks offered joint accounts any longer. I will have to check on that!

By: Viet

Viet — Wed, 12 Sep 2007 18:20:52 +0000

Just FYI for anyone else reading, the Wall Street Journal has a good piece today on building good credit history for your child. It’s currently free for non-subscriber.

In the article, Jonathan Clements point out the same thing that we’ve all point out, that the credit bureaus will do away with the the authorizer user strategy due to abuse.

He did give an alternative to authorizer user though, which is signing on your child has a joint account holder. Definitely a different ball game, as a joint account holder will be legally responsible for a card’s debt. You also can’t simply just take the child off the joint account when your child no longer needs the credit building help — you’ll have to cancel the card entirely to remove them from the joint account.

By: DPLer

DPLer — Wed, 12 Sep 2007 14:52:25 +0000

Shii is correct there will NOT be any piggy back on someone else’s credit. They are doing away with that. I think more needs to be said about avoiding debt. I know this is how to build a good credit record, but avoiding debt is always a must.

By: Viet

Viet — Fri, 17 Aug 2007 06:01:58 +0000

Shii: Thanks for pointing that out. I’m actually aware of the issue, as Fair Issac have recently revisited the authorizer user factor due to auction-style websites with people “selling” their good credit. In short, they will add a stranger’s name and information into their credit card account to help that person boost their credit score, in exchange for monetary compensation. It’s a bit unfortunate that the trend limited the ability for parents to extend their credit to their child, as it was one of the easiest way to build immediate credit (Wanda is a testament to that method!).

HardLessons: I understand your concern in the temptations of having credit, but the article made numerous references to the care you have to take in utilizing a student credit card.

I’m not sure where you got the message of “borrow, pay, and borrow some more” from, as we never made any emphasis on having to go into debt to build credit:

Pay your bills in full. Student credit cards have notoriously high interest rates, and finance charges can accumulate easily. You don’t need to keep a balance or accumulate interest in order to build credit, so pay them in full!

Remember to only charge on items that you can pay off fully within the monthly billing cycle. The minute you spend your credit beyond your earning means, you step into a world of trouble.

In the simple strategy section, you will also see a suggestion that’s similar to a pay-as-you-go strategy:

Obtain a student credit card and charge your monthly cell phone, cable, or gym membership bills to it. Sign up for your checking account’s online account and set the bill pay feature to automatically pay your credit card every month. Put away your credit card and don’t use it. Voilà . You’re now building credit in your sleep.

If you do feel that the message is mixed, I’d be more than happy to revisit the article, as the last suggestions on authorizer user needs to be updated due to the recent changes in credit score calculation.

By: HardLessons

HardLessons — Thu, 16 Aug 2007 22:07:20 +0000

This is some of the worst advice I have every seen for college students. Few can handle the temptations of having credit, and there is no need to establish a credit score early in one’s college career. The message — borrow, pay, borrow some more, pay some more — is one that quickly gets out of hand. No where here do I see a recommendation for basic savings, or a pay-as-you-go strategy. I see no recommendation for using a debit card rather than a credit card. I see no recommendation for avoiding debt.

Sad that this site is giving such mixed messages to one of the most debt-vulnerable groups in the country. Shame on mint.com for publishing this.