So my daughter is going off to college and we thought she should have her own credit card. She went online and clicked a Chase account that said “Great for Students.” filled it out, and was rejected. So how does one get a credit card with no credit history. The colleges are always giving away t-shirts and water bottles, and paying money to college groups based on the number of applications they receive. I am confused. She was rejected for not credit history, but many of these college applications must be the same. Where can I go to get her a credit card so she can buy stuff online and such?
About 30 years ago, when I was in this situation, the going advice was to get a Sears credit card. Sears would give credit to anyone with a pulse, and you can always find something there to buy. So, buy something on your charge, and make sure that you make your payments on time. Then, apply for a Visa/Mastercard using Sears as credit history.
I don’t know if Sears still has their own credit card, but it’s worth looking into. The bizarre thing about credit is that no one will give it to you unless someone else has. Then, they all fall over themselves to get you as a customer.
This won’t help if your daughter is leaving in the next few weeks. Perhaps you could call your credit card company to authorize her (temporarily) until her credit has been established?
You might also talk to your own bank (or the bank where she has her account). Since most of them are run by actual humans, they can make a decision based on her and not some number. If you belong to a credit union, even better.
Robin
Yup, as Plynck said, call up your card(s) and see if you can add her as an authorized user. The longer the history is, the better. Have the card sent to you and cut it up (unless you want a college student to have your credit card). The history of the account will show up on her credit score.
If that doesn’t work, have her attempt to get a secured credit card (watch out for monstrous fees though). These are subprime cards, but would be a good start to building credit and most likely won’t have much more than a $300 limit. Orchard Bank and First Premier are two of the CC providers that do these kind. Make sure that the card does report to the big 3 (Experian, Equifax, and TransUnion).
You can open up a Bank of America account in like five minutes online. With the account you’ll get a Visa Check card. She can use this card for online purchases and the like. And since it’s a seperate account and not her big money account, she wont have to worry about some shady company charging away her entire life’s savings and wiping her out or something. She can just keep a small amount of money in there.
The best advice for how to get a credit card is NEVER GET A CREDIT CARD! They’re evil!
I kind of disagree with Bear_nenno, Yes credit cards are evil, but they can also help your credit history.
Have your daughter get a loan from your/her bank or preferably a credit union, and they’ll usually give loans around $1000 USD to people who don’t even have a credit history, they did it for me.
The hard part is to NOT spend the money. Wait till her first bill period, then payoff the entire loan.
This starts her credit history. and she’ll be able to apply for a credit card approximately 1 to 2 months later.
Hope this helps.
Ummm… don’t bother with the secured cards. The service fees, APR and other charges range from too high to downright evil.
You’re better off doing a debit card or finding a REAL student credit card.
Your daughter will have credit card reps all over her college from time to time, likely giving away souvenirs just for people to apply.
If she applies for 5, she’ll get inquiries, which won’t help her credit score, but odds on one of those 5 WILL be in the business of extending credit to people with no income and no credit history.
I suggest a credit-free lifestyle, with the possible exception of using credit during long-distance trips, when you’ve already money in a savings account to pay off the bill you get after the trip.
Credit cards are not evil. People who don’t know how to manage credit responsibly are, well, I won’t say stupid, I’ll say…unfortunate.
When I was unable to otherwise get credit because of enormous medical bills I had no way of paying, I got a credit card with a miniscule limit through a secured account. Open a bank account and get a card that’s secured by that account. After a year or so of good performance, the card went unsecured and I closed the bank account, and over the years since I’ve received regular credit limit increases and also qualified for other credit unsecured. The only drawback to them is that they tend to have very high interest rates, but as long as you’re paying off the balance in full every month that isn’t an issue.
And I see upon more carefully reading instead of just skimming that others have offered the same suggestions. So never mind.
This is not really good advice in this day and age. There are many things that are really a pain in the ass to do without credit cards. Renting a car is hard to damn near impossible. Checking into a hotel is hard.
You might see if there is a credit union associated with that college, and if they have special offers for students.
Before I went off to college, my dad got me a Discover Card application and had me fill it out just to see if they would give me a card. I listed my job as “college student,” and my income as “call Mom and Dad.” I was promptly issued a card, which I still have.
I’m guessing they’ve cracked down on things since then. I would go with what other posters have said – go to your bank and see what kind of services they offer. Wachovia, for example, offers student checking (no monthly ATM fees unless you use an out of network machine, and no check fees).
I don’t want to spend money on a secured account. We actually plan to have the bills sent to us and pay them off. It is really just for things like internet shopping, and so she will have the ability to buy train or bus tickets on her own. We want it in her name so she WILL be building a credit history. I have half a dozen cards, all but one which was never activated because when I would go somewhere and they would say “10% off if you get our card.” Until she gets a student card, the easiest thing, I guess, would be to activate one of them and LOWER the credit limit. Interestingly, she has a Bank of America account but it is a money market account (no monthly fees) and that only allows a certain number of withdrawals. Perhaps I will transfer some of the money to a regular checking account and let her use the VISA check card thing. I assume this is actually a debit card, rather than a credit card, or can it be used as both?
As long as the card has a Visa logo (or MasterCard) on it, it can be used at merchants that accept Visa (or MasterCard). The money is automatically deducted from the account, so it is a debit card.
The downside to these is that they don’t build credit, and if there’s no money (or not enough) in the account, the transaction will not go through. Thus, if you get busy or forget to put money in her account, she may not have enough to buy bus tickets home.
If she (and you) is serious about wanting to build credit, I’d suggest she open an account with her university’s credit union and talk to them about a low-limit credit card. They’re used to dealing with students and, as I said before, are more willing to sit down and LOOK at her record. She may not get the lowest interest rate, but it’s a start.
Robin
If your goal is to build the daughter’s credit limit, making her an authorized user on one of your credit cards will probably have the exact same effect as having her get her own card.
In fact, if you have a Mastercard you’ve had for 10 years and add her as an authorized user, she’ll get a 10 year credit history overnight.
There are some financial institutions that don’t report authorized users, but most appear to. One of mine actually ASKED if I wanted an authorized user reported or not… I could have chosen either route.
The “VISA check card thing” can be used to perform PIN-based transactions via an ATM network or signature-based transactions via the VISA network.
Bear in mind that merchants can tell the difference, and may be awkward if you try to rent a car on a VISA debit card, for instance.
You know, I’ve NEVER had trouble getting a hotel room with a debit card. The trick is to have enough money in the account to handle the holds the hotel will stick on the account, which can sometimes run 4 times the cost of the room… more if it’s an extended stay.
I never had trouble doing any of those things either. And no institution has ever given me a loan because I had good credit card history. When I was first starting out, I had like 5 credit cards and I was doing well on all of them. When I went to buy a car, they told me that “revolving credit” like credit cards means nothing to them. So I had to settle for a cheaper car and get a co-signer.
Then a couple years later I tried to buy a jet ski. Again, they told me that that four years of good credit history with the CC companies was irrelevant to them. So it seemed to me that Credit Cards don’t really help you all that much as far as credit rating goes. But they can definitely hurt you.
But people here are saying that they do help… so what gives. How much help are they? Why have I been told different by lending institutions??
When my youngest went to college last year, we went and opened her a checking account. They threw in a CC with a 1,500 dollar limit. They have since raised her limit to $2,500.
YMMV of course
To second and third what several others have said, call your bank and ask them to issue your daughter a card linked to yours.
Wachovia Bank did a great job in setting up accounts for my children. Wachovia’s policies encourage the children of customers to become customers.
We set up these accounts primarily in order to have a way to get money to our children when we needed to. Their accounts are linked to ours, and we can transfer money from our account to theirs either on an automatic schedule, or as needed. We do all this on-line. So if there were an emergancy with Son at College Far Away, I could transfer $$$ to his account and the funds would be available to him immediately.
You, Bear_Nenno, have discovered the wonder that is “multiple kinds of credit scores”.
The straight “FICO score” you hear about is only one of the products out there.
Lenders in specialized industries can receive specialized scores that are calculated based on different criterion than the normal “FICO score”.
There are insurance scores, auto loan scores, and probably three dozen other types of scores I’ve never heard of.
Additionally, the guidelines some auto loan originators use for underwriting probably include guidelines based not on score but on items found on your report. For instance, they might say “anyone who doesn’t have a previous installment loan lasting 24 months won’t get approved for a loan above $15K” and “no loans above $8K for persons with a bankruptcy in the last 4 years”. Those are just fictional examples, but all lenders have business logic they use in underwriting in addition to pure scores.