Tips for getting credit after college

by Center for Personal Finance editors

WASHINGTON (6/8/06)--Ideally, college graduates should have established some credit while in school. But recent grads just starting out on their financial journey with no experience will need to follow some simple strategies to get credit right after college (Kiplinger.com May 31).

Some experts recommend students acquire money management skills with a checking account and debit card before applying for a credit card, yet many of them couldn't get any form of credit while in school and ended up having to co-sign with Mom or Dad.

Credit or not, recent grads need to cover all bases...by tracking expenses, managing money responsibly, paying all bills on time, and saving some bucks along the way. These ideas will put you on track for establishing credit:

Start where you have your share/checking account and ask for a credit card application. If you've managed your account responsibly, your application probably will be approved.

Apply for a credit card from a retailer or department store. They're easier to get than some major bankcards and you can build a credit history in six to 12 months--as long as you make purchases and pay all your bills on time.

Apply for a small loan or line of credit from the credit union.

Apply for a secured credit card from the credit union. These cards require you to deposit money in an account to secure the credit or loan limit, but they may have fees and/or higher interest rates because of the higher risk. If you default on your payments, the lender uses the secured line as a fallback. Those fees and/or rates should come down as you show that you're charging and paying back responsibly, but you may have to reapply.

If you're sharing housing and utilities, make sure at least some of those bills are in your name and pay on time.

Whenever you're applying for credit, ask if the issuer reports to a credit bureau; if not, having that unreported credit card or loan won't help you establish good credit.

Once you get any form of credit, pay it off responsibly and on time.