College Grads: Should You Get A Credit Card before You Get a Real Job?

/ BY / Students

Are you a soon-to-be college grad who hasn't yet found a "real" job? With the U.S. unemployment rate still hovering close to eight percent, you've got a lot of company. There are many young people graduating from college this spring who will be working part time and temporary jobs while they search for a position more closely related to their field.

That makes it a terrible time to apply for a credit card, right?

Wrong!

While it may be more difficult to qualify for a credit card before you’ve landed a permanent position, when it comes to building a good credit record the sooner you can start, the better. One of the factors that goes into your credit score is the length of your credit history. So if you can get a card—and use it wisely—it will be to your benefit long term.

Having a good credit record might even help you land a better job. According to Experian, one of the three major credit reporting agencies, federal law allows potential employers to receive a modified version of your credit report. A good credit report may even give you a slight advantage over other job applicants, while a negative credit report may reduce your chances of winning the position.

Your credit card options

So how do you get a credit card before you get a real job?

  1. Stick with what you already have. If you applied and were approved for a student credit card while you were still in school, keep using it.
  2. Consider a secured credit card. With a secured card, you deposit a set amount of money in a special account with the bank that issues the credit card. The amount of your deposit may be equal to your credit limit or some percentage of your credit limit on the card.

    A secured credit card works like any other card; you make charges, and pay the bills each month. If you fail to make payments, the bank takes the money out of the secured account.

    If you demonstrate that you are able to handle credit responsibly, however, the bank may eventually reduce the amount you need to keep in your account or eliminate it altogether. (Or, if you’ve built good credit, you may qualify for a better credit card elsewhere.)

  3. Become an authorized user on someone else’s card. Your parents or someone else with good, established credit may be willing to add you to their credit card account as an authorized user. If they do, their account information goes on your credit report, helping to boost your credit score. (This is called piggybacking.) While piggybacking on someone else’s credit won’t do as much good as establishing your own account—because you’re still not responsible for the debt—it should help.
  4. Get a cosigner for your credit card account. If you can’t qualify for an account on your own, a parent or other relative might be willing to open a joint credit card account with you. Since you’ll both be liable for any debts you incur, you get full points on your credit report for managing this kind of account wisely.
  5. Apply for a retail card. It’s generally easier to get a store credit card because their limits are low and their interest rates are high. It’s a good way to build a credit history so you can qualify for a bank credit card.

No matter how you get a credit card after you graduate, you should follow these basic rules when using it:

  1. Pay off your credit card bill each month to avoid paying interest.
  2. Pay it on time so you won’t be stuck with high late fees.
  3. Use it sparingly; try to keep your utilization rate at 25-30 percent of your credit limit.
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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. CreditCardXpo.com recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.