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Student Credit Cards 101: Everything You Need to Know

Student cards can be helpful tools, but if you're under 21, aren't employed and lack a credit history, it won’t be easy to qualify. Here's what to know.
March 6, 2020
Credit Card Basics, Credit Cards
Getting My First Credit Card: What Every Student Should Know
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Before 2009, credit card issuers used to set up tables on college campuses, giving out free T-shirts or Frisbees if students signed on the dotted line to get a student credit card. This kind of easy access to credit was great for some, but it got many young people into debt. Financial reform mostly put an end to these practices, and students — indeed all adults under age 21 — now have a much tougher time getting approved for a credit card.

If you’re ready to apply for a student credit card and begin building credit, here’s what you should know.

» MORE: NerdWallet’s best student credit cards

What is a student credit card?

Student credit cards are designed to help you start building credit. They function like regular credit cards, except they tend to offer lower credit limits and little to no incentives.

You don’t necessarily have to be a student to qualify for a student credit card, depending on the issuer. But you will still have to meet eligibility requirements, depending on your age.

» MORE: How to choose a student credit card

Age and income requirements

IF YOU’RE UNDER 21

It is technically possible to get a credit card on your own, but issuers will require you to have an independent income, which most college students do not have. If you’re under 21 and don’t have your own income, you will need a parent or another trusted adult to co-sign for you on a credit card application.

IF YOU’RE OVER 21

Credit card restrictions are not as tight once you pass your 21st birthday. You’ll still need to demonstrate that you have income, because issuers want to know that you can pay back what you spend. But you can include any income to which you have reasonable access, such as the income of a partner or spouse.

» MORE: How international students and immigrants can get a credit card

Other options for building credit

If you don’t have any credit history at all, it can be very difficult to get approved for your first credit card. Here are a few strategies that can help you clear that hurdle.

APPLY FOR A SECURED CREDIT CARD

Secured credit cards require you to put down a deposit that’s usually equal to your credit limit. But if you make a small purchase on the card every month and pay the bill on time and in full, you’ll be able to build a positive credit history.

As long as you’ve maintained a good payment history, you’ll get your deposit back once you upgrade to an unsecured credit card (a regular credit card) with the same issuer or close your account and get another credit card elsewhere. Closing your account can have negative consequences for your credit score, so it’s best to look for a no-annual-fee secured card that has a path to upgrade to a regular credit card with the same issuer.

» MORE: NerdWallet’s best secured credit cards

GET A CO-SIGNER

If you get someone else to co-sign for you, that person’s income and credit history are used to determine eligibility. However, if you misuse the credit card, your co-signer’s credit history could suffer. Co-signing a credit card for someone else requires a lot of trust. And even if you can find someone willing to do so, it may still not be an option, as there are only a few credit card issuers that allow co-signers.

BECOME AN AUTHORIZED USER

Authorized user status is different from getting a co-signer. As an authorized user, you’ll have a credit card with your name on it, but it will be tied to someone else’s credit card account. If that person uses his or her credit card wisely, it will reflect well on your credit history.

USE RENT-REPORTING SERVICES

Rent-reporting services can record your rent payments on your credit reports. Some services are free and others charge a fee, but it may be worth paying if it doesn’t hurt your budget and you can start building credit early.

For some rent-reporting services, your landlord may need to be a willing participant and verify your payments. But if the stars align, that’s enough to give you a credit file, which is better than having no credit history at all.

TRY EXPERIAN BOOST

Experian Boost lets you record cell phone and utility payments on your Experian credit report. It’s free to create an account through Experian’s website. You’ll have to connect the bank accounts you use to pay those bills for this service to work. Experian’s website says that your information will remain private.

» MORE: 5 questions about applying for a student credit card

Why building credit now is important

If you can begin to build credit while you’re still in school, it’s worth the effort. Having good credit will smooth your path once you’re out of school. It can make it easier to get a job, rent an apartment, get insurance and utilities — all of which you’re likely to need once your student days are behind you.

» MORE: What to do if you can’t get a student credit card