Just Out of College Without a Credit Card? Now What?

For recent college graduates, there are a lot considerations to make: where to work, where to live, what kind of car to buy. These are all big decisions and many times for new grads the decision is being made for them due to their lack of creditworthiness. If you were able to survive college without a credit card, you may now find that it seems impossible to get one. Where once there were promotional offers pouring into your mailbox, now it seems the well has run dry and credit card companies no longer realize you exist. Without having a credit card in college, you likely did not take other steps at building your credit, and the reality is, without credit, it can be difficult starting out on your new life.

Fear not! Even if you didn’t have a credit card as an undergrad, there are still opportunities for you to reach out to after graduation. Building a good credit history is very important because it will be instrumental in years to come, like when you want to buy a home. Some employers will even require a credit check during the hiring process. If you do not have a credit history, now is the time to start building one from the ground up.  So, off we go…

How to Build Credit
Even if you already went through the pomp and circumstance of college, there still may be credit cards out there that are geared towards students. These offers may not find you in the mail but you can certainly look for cards you will still be eligible for as a recent graduate. If you find and get approved for such a credit card, use it judiciously. Make small purchases regularly and only buy what you can reasonably afford to pay off at the end of each billing cycle. Be sure the payments you make are on time each month too. How you pay your bills are very important to your credit score. Late payments can eventually lead to a bad credit history, which is just as bad as no credit history at all.

If there are no traditional or student-related credit cards for which you are eligible, then move along to investigating some secured credit cards which can still help you build credit. While you will have to pay cash upfront to establish credit, using the card responsibly will be reported back to the credit reporting bureaus and reflect positively on your credit report. Continue using secured cards until your credit history has been sufficiently established and then apply for one or two traditional credit cards with a reasonable limit. Continue to use the credit cards you have responsibly by paying the balance in full each month.  This is key to establishing your credit early.

If there are no credit cards for which you are eligible right after graduation, you might consider asking a family member to co-sign a credit card account for you. The drawback to this method is that you are not only indebted to the credit card company, you also have an obligation to the relative to ensure you are not negatively affecting their credit record. It can be a huge undertaking to have to worry about your financial obligations and its effect on those you love so seriously think about other alternatives to asking for a co-signer.  Once you have set up a good credit file, continue to use your credit extensions responsibly. Perhaps a car loan is next on your list. As with credit card payments, making on-time payments for your loan is absolutely critical to establishing and keeping good credit.

During these tough economic times, it may be difficult to find a first job and keep your bills paid. If you start off on the right foot and understand that consequences of credit and the importance of budgeting, you’ll likely start making financially healthy choices early that will also carry throughout the rest of your life.

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This entry was posted on Saturday, July 11th, 2009 at 12:16 pm and is filed under Credit Card News, Debt & Consolidation, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.