Guide to getting your first credit card while in college

If you’re a college student who’s eager to build credit and capitalize on safer and more convenient transactions than using cash, it’s time to think about getting your first credit card. Fortunately, there are several worthy types of credit cards to consider at this age and financial stage.

Take the time to learn how to apply for a credit card as a student, how to maximize and properly use a student credit card and additional strategies for building credit as a college student.

Top 4 things to know about student credit cards

There is a minimum age to get a credit card

You might wonder about the age requirement for obtaining a credit card. Before 2009, credit card issuers could approve young adults for credit cards without strict age criteria. However, following the enactment of the Credit CARD Act in 2009, the minimum age was set at 21 unless an individual who is at least 18 years old had a co-signer or could demonstrate sufficient income.

Upon reaching this milestone, you may feel eager to embrace financial independence, which is perfectly understandable. However, if you’re a younger student, such as a 17-year-old college freshman, you’ll have to wait until you hit 18 to apply — regardless of your income or ability to find a co-signer.

Your first card may not be your best card

Truth is, the first card you get as a college student probably won’t be the best card you ever own. That’s because your initial card is more about building credit than being a generous rewards card.

“There are some student cards that allow for rewards, but especially if you have a lower credit score, you may have a card with no rewards until you get your credit built up. Starting to build your credit now can be helpful, but it’s important to use the card responsibly because not doing so can actually dig a hole that can be hard to get out of.”

— Kendall MeadeSenior financial planner, SoFi

Ted Rossman, senior industry analyst for Bankrate, agrees.

It can be difficult to get approved for a first card

If you lack income and/or a credit history, it can be challenging to be approved for a student credit card. Barbara Quan, manager of financial education for Golden 1 Credit Union, recommends practicing patience and researching several different card opportunities to narrow down your options.

“You always have the option of pursuing a secured credit card,” Quan says. “This allows you to secure your card with a required deposit. A secured balance can enable you to jumpstart your credit with confidence.”

Your first card can help you build good financial habits

Not only can your first credit card aid you in building credit, but using it can also motivate you to get a better handle on your money.

“This can set you up for long-term success, and learning how to budget and manage finances is just as critical to success as the classes you will take on campus,” says Quan.

However, if you’re not careful, that first card could backfire, sending you into a deep debt hole that can be hard to climb out of. That’s why it’s crucial to follow best practices with any credit card, especially your first. Some smart moves include:

• Pay your credit cards on time and, whenever possible, in full
• Avoid overspending, only charging what you can afford to pay back
• Keep tabs on transactions by tracking your spending and budgeting carefully. Consider setting up transaction and balance alerts so you’re regularly texted with this information

How to apply for a student credit card

Determined to get a student-friendly credit card that’s right for you? Be prepared to follow several steps.

Understand when is the right time to get a credit card

After moving off to college, you may be ready to embrace a whole new attitude of independence — including some financial independence. However, wanting to become independent and being ready for the responsibilities that come with it are two different things. This is especially true when it comes to financial tools like credit cards.

Before deciding whether the time is right to open a student credit card, ask yourself the following questions:

• Do I really need a credit card or are there other ways to build my credit?
• Have I ever had to pay monthly bills, and do I have a history of paying them on time?
• Do I have a sufficient income source to pay back any credit card bills that I accumulate?
• Am I mature and responsible enough to purchase only what I can afford and stay out of credit card debt?
• Will I be able to pay off my card in full each month?
• If I’m not approved for an unsecured credit card, do I have the cash — often $50 to $200 — to make a security deposit on a secured credit card?

If you can answer yes to all of these questions, you may be ready to get your first credit card. If not, consider waiting to apply until you are ready to handle a credit card responsibly.

Determine your credit score

Your credit score serves as a numerical indicator of your credit well-being. Its primary purpose is to aid lenders in evaluating risk, particularly the probability of you defaulting on your credit responsibilities within the next 24 months. Numerous credit-scoring models exist, with the FICO credit score being the most common. In fact, FICO says that over 90 percent of major lenders depend on its scores to assess consumer eligibility for their financial offerings.

“It’s important to know where you stand before applying for a credit card or any other loan, which is why it’s smart to check your credit score first,” suggests Rossman.

You have the option to acquire your credit score from the primary credit bureaus, namely Equifax, Experian, and TransUnion, as well as directly from FICO. If you opt to obtain it from the bureaus, it must be provided at a cost deemed “reasonable” in accordance with the legislation that introduced free annual credit reports. Alternatively, you could have free access to your credit score through various other channels. Many credit card issuers and banks extend credit reporting and scoring as a complimentary service to their cardholders, and some — such as Discover — even allow non-clients to access the service.

The lower your score, the higher the chance that your credit card application may be denied. Rossman advises aiming for a minimum credit score of 670 before applying for your first credit card, if it’s possible for you to wait.

Research student cards

You’ll want to carefully research different credit cards before choosing one.

“Factors to consider include the interest rate charged, the maximum credit limit, annual fees, and potential rewards or cash back offers,” suggests Annette Harris, owner of Harris Financial Coaching.

If you lack a credit history, remember that you likely won’t qualify for a traditional credit card at first. In this instance, consider applying for a student card or secured card, which involves making a deposit that serves as your credit line.

“Secured cards are often easier to get than traditional credit cards,” adds Rossman. “You might also want to consider applying for a first card with fintechs like Petal or TomoCredit that look beyond the traditional credit score and are therefore more able to extend credit to young adults and other underserved groups. If you are comfortable managing credit and want to start pursuing a reward strategy, I’m a big fan of simplicity. A no-annual-fee cash back card, such as the Bank of America® Unlimited Cash Rewards credit card for Students – which provides 1.5 percent cash back on every purchase – fits the bill nicely.”

Apply online

You should be able to apply online for your chosen credit card directly with the issuer or by using a marketplace like Bankrate.com.

“Bankrate has a helpful approval odds feature that gives you a good idea of where you stand,” Rossman continues.

When you’re ready to begin your application, you’ll want the following information handy:

• Social Security number
• Date of birth
• Details about your income, including tax withholding information and occupational details
• Proof of school enrollment if you’re applying for a student card

“You might have to indicate that being a student is your occupation, and your parents could be listed as your source of income if you don’t have a part-time job,” says Harris.

Wait to hear back

After applying, it could be a few days before you get a verdict on whether your application was approved or denied, although most applications yield an instant decision – especially when you apply online.

“You can try applying with a different credit card issuer if you are denied,” Harris says. “However, it’s important to know that multiple credit applications in a short period can hurt your credit score, so be strategic about submitting credit applications as you work to build your credit score.”

If the issuer denies your application, it will also send you a letter detailing the reasons for the denial. Take a look at that reasoning before pursuing a different card. It could be that there are steps you can take to make your next application more likely to be approved.

How to maximize a student credit card

Once you have your first card, you’ll want to use it responsibly while also taking full advantage of its benefits. Try these tips:

Pay attention to credit utilization

Credit utilization is the amount of credit you’re using compared to the amount of credit available to you. So if you have a $1,000 credit limit and you have a $200 credit card balance, your utilization is 20 percent.

Quan advises keeping your usage to less than 30 percent for maximum benefit to your credit score, which takes credit utilization into account.

Pay in full each month

Pay your card balance in full every month to avoid paying interest on your transactions.

“Credit cards can have very high interest rates,” Meade cautions. “If you are just making minimum payments, it can take a very long time to repay your debt.”

Not only will you incur interest charges, but your credit utilization could suffer if the interest racks up over several months.

Pay on time every month

“Payment history is often the largest factor in determining your credit score, representing 35 percent of your score,” says Meade.

That’s why it’s important to always pay your credit card bill on time. Doing so allows you to avoid late fees and prevent harm to your credit.

Take advantage of tools such as autopay or calendar alerts to remind you to make a payment — ideally for the full balance, but at least the minimum due — each billing cycle.

Start small

When you’re looking to build credit, the key is to use your card and pay it off. You don’t have to spend a lot to have a positive impact on your credit.

“Especially when you are just starting out, the basics are most important. Maybe just make occasional small purchases on the card at first or small recurring bills like a streaming service subscription,” Rossman notes. “Over time, you can put more purchases on your card and pursue more of a reward strategy.”

In all cases, spend within your means. Don’t charge more than you can afford to repay when the next bill comes due.

Consider the rewards

It isn’t the primary goal with your first credit card, but if you are able to earn rewards, make sure you understand the program so you can make the most of it.

“For example, if there is a larger cash back or points boost for everyday essentials like groceries or gas, consider those as savvy purchases to put on the credit card,” advises Quan.

The “spend within your means” advice still stands, though. Don’t spend on your card just to earn rewards.

Additional ways to build credit as a student

Getting your first card isn’t the only way to nurture your credit. Consider these other suggestions:

Become an authorized user

“Have a parent or guardian add you as an authorized user on one of their credit card accounts,” says Quan. “This is a good way to jumpstart credit building before you venture out and apply for your own card. Just make sure whoever you ask has good credit to begin with.”

Get a co-signer

Having trouble getting approved for your initial card? Consider having a parent, relative or loved one co-sign for you, keeping in mind there aren’t many issuers these days who allow co-signers.

“Just know that this is a big responsibility. If you don’t pay on time or you max out the credit card, that will affect your co-signer’s credit score,” Quan says.

Apply for other forms of credit

Getting and using a credit card isn’t the only way to up your credit score and build credit. Applying for other credit accounts, including a car loan, student loan or mortgage, can also help. Keep in mind, many student loans are deferred until after graduation, so they won’t help build your credit while you’re in school.

“However, as with a credit card, make sure you make on-time payments and keep a good mix of credit,” Meade recommends. “Note that credit history length also plays a role in your credit score. The longer your credit history, the higher your credit score – assuming you make payments punctually. Therefore, some longer loan terms can help increase your credit score, although it’s a slow process.”

The bottom line

Contrary to common belief, securing a high credit score from the get-go isn’t a prerequisite for qualifying for a quality credit card. There’s a variety of student cards tailored for young adults without established credit histories.

But once you obtain a credit card, it’s crucial to consistently pay your bills in full and on time so you don’t damage your credit. Gradually, you’ll witness an improvement in your credit score. A solid credit score lays the foundation for achieving future financial objectives, such as purchasing a home, obtaining a loan or financing a vehicle. Hence, it’s essential to initiate the development of healthy credit habits as soon as possible.

If you’re prepared financially and maturity-wise to apply for a credit card, don’t delay. Be transparent about your student status and income level, and you should be well-equipped to embark on your credit journey.