So if you’re like me and don’t use credit cards, acquire one one (or more) and just destroy it. Years down the road, you’ll have maintained a zero balance on a credit card and it will look nothing but positive (Atleast for me, it did)

This kind of (strangeness?) thing may not happen to everyone, but it certainly worked in my favor here.

Mind you, this option should be left to the last, after you have exhausted all other options. This is because you have to put away a large amount of money in a savings account that does not attract significant interest as security for the credit line. Also bear in mind that this saving account cannot be touched and is effectively locked.

Its called manual underwriting – and the federal government says that a person with no credit who pays their landlord early or on time for two years can get the same exact same interest rate on a mortgage as someone with ‘perfect credit’ who gets financed via FICO score lending.

And if you needed a co-signer to buy a TV (there a highpoint), then maybe you couldn’t afford the TV. Debt is a means of overspending. Rammy points this out beautifly in the post – “with a credit card you could have $0.00 in your bank account and you’d still be able to spend.” Maybe with $0 in your account you should hmmm, stop spending. So the best part – thats why its in bold – is the command “Bottom line: Credit cards are free loans if you pay your monthly balance. If you can’t pay it off by the end of the month, don’t buy it”. So how exactly do you do that with say, the aforementioned $0 in your account?

The summery here: a credit card is an easy means of overspending and going into debt for your daily purchases. This will build your credit so that you can later go deeply in debt and buy really big things that you can’t afford. You don’t need them, the majority of Americans don’t pay them off, and a bunch of zero balance credit cards will actually hurt you when you apply for a mortgage because they see you as an accident waiting to happen.

It is important for college students to start building credit while they’re still in school. I came out of college with no debt (I had no loans), and no credit. I had one credit card that was linked to my parents’ account, so it wasn’t helping me. Creditors had no history for me, so they wouldn’t give me any credit even after I had graduated and was making a significant salary. I couldn’t even get a credit card at Guitar Center to buy the $600 bass guitar I wanted. I had the cash, but just wanted to open a line of credit. They wouldn’t approve me, so I had to pay in cash. Never had any bad credit – no missed bill payments or anything, but I just couldn’t get any credit. I tried to go into Men’s Warehouse to buy some clothes for my new job coming out of college, but I couldn’t get approved there either (Once again, I had the cash to pay for the stuff, but wanted to try to get a card, since that’s what people were advising me to do – try for a store card, they’ll accept you. RIGHT.)

I had to have some help to get started… Now I have great credit, but it sure was a PITA leaving college with NO CREDIT HISTORY… After getting a co-signer for a line of credit to buy a TV and a co-signer on a car loan, things started to turn around. Once I got a mortgage and paid off a car loan, things REALLY turned around. Now I get so many offers, it’s freaking annoying. (couldn’t have gotten a mortgage or car loan without my wife’s help)

I was a little miffed with my parents for not teaching me that I would need a credit history of some sort. They thought I should be fine, though, since I had no debt. Not the case… I would have been better off if I would have gotten one or two of those crappy college card offers. At least I’d have been accepted and they would have had some sort of record of me.

I’d like to encourage parents that might read this to start helping your children build a credit history early – even before college begins. If your kid can have a job in high school, then teach them to pay off a credit card at the end of the month. Help them get a low-limit card in their name, and keep tabs on what they do with it. If you buy them a car with a loan, get them to co-sign on it with you, or something like that. It really will help them later on down the line.

I’ve got what might be a slightly dumb question about credit cards, however: as a college student heavily in student loan debt, is it still a good idea to get a credit card? Will that not prompt creditors (bankers, lenders, the powers that be) to notice that I’ve got thousands to pay off?

Thanks!