Ask YOUNG MONEY: How can I build good credit?
Dear YOUNG MONEY,
I'm a USC student and a junior. My dad has bad credit and my mom has no credit. I had one credit card--a Victoria's Secret card. I missed a few payments, finally paid the whole thing off, and canceled the card.
Now I checked my credit report and it said nothing about that. It only listed my student loans as my credit. I wanted to know whether or not I should apply for a student credit card or something else in order to build my credit and get a good credit score.
I have a regular job now and have a lot more sense about what to do. Thank you very much.
Laura
Dear Laura,
Thank you for emailing Young Money with your question.
I think it would be a good idea for you to begin to establish credit of your own. I'm surprised the Victoria's Secret credit card, which is underwritten by World Financial Network National Bank, is not showing on your credit report. It may pop up eventually. In the mean time it is a good thing that the missed payments are not showing yet and a good time to apply for credit.
Your credit score will dictate what interest rates you are offered. Your credit score may be lower due to your lack of credit history.
I suggest you start slow and carefully shop for a first credit card. Be sure to read the fine print on any credit offer very carefully. I would stay away from credit cards that require annual or monthly fees of any kind. There are too many offers out there with no fees competing with high cost accounts. You only need a Visa or MasterCard to get started. As a student at USC, do you have access to a credit union either on campus or nearby that might make special offers to students? I'd check into it.
The key to success with credit is to make on time payments all the time if you choose to carry a balance - which you should always try to avoid.
mindyourfinances.com and youngmoney.com have lots of great information and guidance about how to handle credit for the first time.
Have a great summer.
Mike “The DebtBuster” Schiano
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