The best first credit card for students is the Bank of America® Customized Cash Rewards Credit Card for Students because it reports to the main credit bureaus monthly, has a $0 annual fee, and only requires limited credit for approval. Plus, Bank of America® Customized Cash Rewards Credit Card for Students gives 1 - 3% cash back on all purchases. And its intro bonus of $200 for spending $1,000 in the first 90 days is the cherry on top for students getting their first credit card.
The biggest feature to look for on your first credit card is credit bureau reporting because that will help you build your credit score, assuming you use the card responsibly. Fortunately, nearly all credit cards from major issuers report to credit bureaus. You’ll also want to look for a card with no annual fee because newcomers to credit shouldn’t need to pay for the right to build their credit history.
The best way to build credit at 18 is to get a credit card in your name and use it responsibly. All major credit cards report account information to the credit bureaus each month, allowing you to build credit history. As long as the information shows on-time payments and reasonable … read full answercredit utilization, that credit history will be positive and you’ll be on your way to building a good credit score.
There are two ways to get a credit card at 18: as an authorized user or by applying for your own account. If you have enough independent income to afford monthly bill payments, you can get your own credit card account when you turn 18. The best type of credit card to get at 18 is a student credit card, assuming you’re in college. Credit cards for students tend to have better rewards as well as lower rates and fees than other starter credit cards for people with no credit.
But any type of card will do, provided it has a low annual fee and you use it right. To help you with that, we’ll lay out the recipe for building credit at 18 below.
Here’s How to Build Credit at 18 Years Old:
Become an authorized user on a family member’s credit card.
Apply for a starter credit card.
Set up automatic payments from a bank account for your starter card.
Make sure your card’s monthly statement balance is much lower than the credit limit.
Work toward a high-paying job.
Save as much as possible and minimize debt.
Monitor your credit and make adjustments when needed.
Using a credit card isn’t the only way to build credit at 18. One alternative is taking out a credit-builder loan, which is essentially a loan that holds the borrowed money in a bank account while you make payments. This allows you to build credit easily, and doesn’t require a good credit score. Once you’ve made all of the payments, the money is released to you. Credit builder loans are typically small (think around $1,000) and have short repayment times, usually just a year, so their sole intent is to help you build your credit.
Financing a car using an auto loan can also help you build credit. Just like any other loan, payments you make are reported to the credit bureaus. Getting an auto loan can also help your credit because a portion of your score is determined by your “credit mix,” so having an installment loan adds variety even once you have a credit card.
You can also arrange to have apartment rental payments reported to the credit bureaus. Some landlords report monthly rental payments to the credit bureaus automatically, but not all do. If your landlord doesn’t, you can still have your rental payments reported through a third-party service. Some of the top ones are RentTrack, eRentPayment, and Cozy. Paying rent is something you’d have to do each month anyway, so you might as well use it to build your credit, too.
Still, getting a starter credit card and/or becoming an authorized user on a family member’s or friend’s account is the best approach. Just remember that having your own account requires more responsibility, as you’ll be the one who has to pay the bills. If you don’t, your credit score will suffer. As an authorized user, bill payments are the primary accountholder’s responsibility. Because of that, authorized users can file a dispute with the credit bureaus to get negative information removed from their credit reports.
The fastest ways to improve your credit score are to pay down your balances, dispute incorrect information on your credit report, make more frequent payments, and reduce credit utilization. Credit utilization (how much of your credit limits you use each month) contributes to a portion of your credit score that accounts for 20% - 30% of your overall score. So, an adjustment there can result in a big credit boost pretty quickly. Similarly, you can dispute incorrect information with a quick online request or phone call. You won’t always get an immediate credit score increase, but correcting errors on your credit report is a great place to start.… read full answer
There are a few other ways to increase your credit score quickly, from becoming an authorized user to increasing your credit limit. They may not all be equally effective for everyone, as it can take years to build a consistently good or excellent credit score. In fact, some strategies could send your credit score in the wrong direction before leading to an increase. For example, requesting a credit limit increase can result in a hard inquiry that damages your credit a bit in the short-term, but having more credit available could produce long-term gains if used responsibly.
Here’s how to improve your credit score fast:
Pay down your balances. If you aren’t eligible for a credit limit increase, focus on paying down existing debt. Paying down a large chunk of debt at once will help your credit utilization ratio and bump up your score. If you can’t make a large payment all at once, try to pay more than just the minimum monthly amount. If you have multiple debts, start by making payments on the debt that has the highest interest rate so you can limit interest charges.
Dispute incorrect information on your credit report. You should file a dispute for any incorrect negative info on your report. Once the dispute goes through, incorrect items will drop off your file, and your score should improve. You may have to wait 30 days for the credit bureau to review your dispute before you see any changes.
Make more frequent payments. Credit utilization is calculated based on the statement balance on each of your credit cards. You can reduce these balances, thus decreasing your credit utilization and increasing your credit score, by making payments before the end of each billing period. Then, pay off the remaining balance by the due date to avoid interest charges and credit-score damage.
Become an authorized user. If you’re just starting out, or your credit report has a string of negative marks, a good move would be to become an authorized user on someone else’s credit card and build your credit over time. Just make sure the primary holder is responsible and pays their bills on time.
Add new payments to your credit file. There are new services that can add positive information, like on-time utility payments, rent payments, and positive bank balances to your credit report. Not all of these programs apply to all credit bureaus, and some cost money to utilize, but they could boost your credit score over a few months.
Increase your credit limit. A higher credit limit can reduce your credit utilization ratio, assuming your spending does not increase. The only potential problem is that asking for a credit limit increase usually results in a hard credit inquiry, which would temporarily hurt your credit score a bit. But if you get a credit limit increase without asking, or you have a few months before you need the highest credit score possible, a higher limit could definitely help.
Everyone’s credit situation is different, so not every option will be relevant or available to you. The best way to find out exactly what you can do to quickly improve your score is to check out the personalized advice in the Credit Analysis section of your WalletHub dashboard.
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