Getting Your First Credit Card in College? Read This Checklist First

If you decide to get your first credit card in college to start growing your credit score and history, there are plenty of pitfalls college students commonly encounter. From not paying bills on time to choosing the wrong card for you, it is easy for college students to lose track of financial goals when you are busy with your school work or other activities. Before you decide to apply for your first credit card and sign on the dotted line, consider whether you are actually ready for the financial responsibility of having a credit card. 

Here is a checklist to follow as you consider applying for a credit card in college:

Am I Eligible to Apply for a Credit Card?
As mandated by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, you must be 21 or over to apply for a credit card. There are exceptions to the rule, however. If you are able to prove you have the ability to pay your credit card bills or if you are the co-signer of a credit card, you may be approved for a credit card under the age of 21. Even when you are the right age, financial institutions will closely look over your credit history, income and other factors before giving the green light for your credit card. You should make sure you have a spotless credit history to increase your chances of approval, which might require you to request your credit report from one of the three main credit reporting bureaus: Experian, Equifax and TransUnion.

In the event you do get rejected after applying for the first time, re-evaluate your credit history again. You might have missed items in collection or other negative marks. Some of these marks may have been made in error, which will require you to contact creditors and ensure these are removed from your credit history before applying for cards again. 

Do I Have a History of On-Time Payments?
As having a credit card is a huge responsibility, determine whether you have a history of making payments on time. Making small purchases and paying your bills every month is key to building up your credit. First-time credit card users may be unaware of the lasting effects of late payments on their credit score. 

Negative marks on your credit history, such as unpaid debts or items in collection, will remain on your report for several years and accumulating these dings early on could impact your financial future. Not only can lenders or landlords judge a home or rental application based on your credit score, employers may also be on the lookout for bad credit. A poor score is often a red flag for future employers, who may pass your application up in favor of another candidate. 

Can I Differentiate Between Several Credit Cards?
When you are eligible for a credit card, you may receive offers in the mail saying you are pre-approved for a credit card. Although these claims are tempting, you should be able to differentiate between credit cards in order to find the right one for you.

As one option, there are credit cards specifically made for students. While they all may say student credit card, they are not created equal. Some cards may have annual fees or a high annual percentage rate, which is essentially the interest rate. Consider choosing a card with low APR to avoid having to pay a large amount of interest every month, which could increase your financial burden that could even carry on after graduation.

In addition to APR, look into the rewards or other incentives cards – from cash back rewards or travel miles – consider which card fits your lifestyle and financial goals.