Can I build credit with a Bank Card?

Question

i'm an 18 year old college student wanting to start to build credit.

i have an account opened up with washington mutual. im using their debit card.

I'm guessing how it works to build credit is I apply for a credit card, use it, pay monthly on time and thats it?

im new to this credit building world.

also, my friend is trying to do the same thing and says many cards (especially since we're college students) offer many promotions. so what should i look into? i heard long time low interest rates and...? maybe miles? etc?

Answer 1

A credit card is the only way to start building credit. Don't be surprised if they only give you $500 and want 22% APR. It's OK. Use the card and pay it off monthly. Eventually you can get a higher credit line and a lower rate. Please, though, don't do what so many young people do which is to go nuts with the card and ruin themselves financially. Go slow. You have time.
-MM

Answer 2

Yes and no. While opening the card will help you build credit if you pay it off every month in full it won't help very much at all. The credit companies actually call people who do that 'deadbeats'. What they really want to see are customers who are willing to carry a balance and can afford to make monthly payments. That is also why people who only pay their minimum credit card balance every month get themselves into so much debt, they get so much good credit that they start getting offers for 10K, 20K, 30K loans and on and on. And eventually they have hundreds of thousands of dollars that they're paying minimum payments on and can't ever afford to pay any of it off.

The best way to build credit quickly would be to get a small credit card and place about $100 on it and pay that off over two months and put another $100 on it and pay it for two months etc. After about a year of doing that, depending on your situation, look for a small car loan maybe $5-10K that you can afford. Once you get that car/collateral based loan you can switch to just paying the credit card every month. The auto loan will build you a lot more credit than any credit card but you need the credit to be able to get the loan.

And, of course, always make sure you pay those bills on time. It takes years to build up a good credit record and it only takes a couple of months to completely destroy it.

Answer 3

Your debit card will not help you build credit.

One way to build credit is to piggyback off of a family members credit (as long as their credit is good). For example: Ask mom or dad if you can be an "authorized user" on one of their cards. As an authorized user, the credit card company will report your parents information onto your credit file. This can only help so much though and can in fact hurt you if mom/dad do not pay on time. But you can have an authorized user account removed from your credit report easily later (because it's not your account).

Eventually however, you will want to establish your own credit.

Household Bank is a good card to start with. The interest rates are high, but it is a start. After you have a solid history established, you will be able to apply for better cards with lower interest rates OR you may be able to ask Household Bank to lower the interest they gave you to begin with.

Do not apply for too many cards. It will ding your credit score for 1 to 2 yrs as an "inquiry". So pick one card and stick to it. After 6 months, you could try a department store card. Your credit will improve with time and will also improve if you have a variety of different types of credit. Like - auto loan, credit card, department store card, etc.

Don't apply too much and don't over-extend !

Answer 4

No - you need to have a secure credit card to build the credit history and then later on u can get the real credit card.

Yes - because if u have ur account open for atleast 6 months wtih good balance.(Bank accoutn - u will be able to get a$1500 credit card)

Answer 5

no