I'm a senior in college and I've never had a credit card. I figure I should probably get one so I can start building some credit (no credit card, no student loans, never financed a car so as of right now my credit is nil). I only plan on using it for purchases like gas and food that I already have the money for and I will pay it off in full every month so there will never be an outstanding balance.

Anyone have any advice as to which direction I should go?

Get something with rewards (Cash Back), the interest rate shouldn't matter to much if you are on the ball about paying the entire balance, avoid annual fees. checkout capitalone.com they give a decent variety of cards.

There are two ways of looking at this:

The safest thing to keep you out of money trouble is to have a credit card with rewards and make sure you pay off the balance every month. That way, you don't have to worry about interest or late fees at all, but you will have to pay tiny little bullshit service fees.

However, that doesn't help you build your credit. If you pay off your credit card every month, lenders don't want anything to do with you, because you probably can't make them any money. If you have one credit card and stay on it like white on rice, it's unlikely that anyone will ever give you another credit card.

You have to do things to build your credit smartly. Open both a savings and a checking account, and keep lots of money in both. Don't be too tight on your credit card, but pay off the balance completely every other month or so.

Like Swami said, to build credit you're better off paying the minimum each month. My first advice you already said yourself, don't ever have a bigger balance on the card than you have the money to pay off if need be. Another way to build credit is to take out loans (once again I would suggest having the money to cover just in case) and make the monthly payments on it instead of paying in full. If you do ever get turned over to a creditor DO NOT settle for a lesser amount, pay it off in full.

The loan part will work, since I have to stay in school for an extra year (I'm on my 6th major, it took me a while to finally figure out what I wanted to do), and my full ride will run out, so I'll have a school loan for a year.

The cost of paying finanace fees<not building your credit up quickly. Like Swam said, get a savings/checking, and pay all your bills on time every month. You'll be in the 6+s in a few years.

I'm a senior in college and I've never had a credit card. I figure I should probably get one so I can start building some credit (no credit card, no student loans, never financed a car so as of right now my credit is nil). I only plan on using it for purchases like gas and food that I already have the money for and I will pay it off in full every month so there will never be an outstanding balance.

Anyone have any advice as to which direction I should go?

My wife and I got our first credit card when we got married. We also only use it for gas and grocieries (not even fast food). That's it. We figure that way we pay it off every month because you have to get gas and food anyway. We got a Citi Diamond Rewards card for that purpose. It gives you 5 points for every dollar spent at gas stations and grociery stores. All other purchases give you 1 point per dollar spent. We've had the card for 4 years now. From the free points (and they are free if you're just buying stuff you'd have to anyway), we've gotten quite a bit of stuff back. The best option is gift cards (most bang for your buck). We bought a $500 digital camera a couple years ago, and this year I got $600 in gift cards to buy a plasma TV. Remember this is just gas and gorcieries. We've never had a balance carry from month to month.

Also, our limit has gone from 2,000 up to 10,600 on it. We'll never charge that, but it's good to have anyway. Our credit scores are in the high 700's now as well (from that and paying other bills on time as well).

It is definately a good thing to have, but you must pay off the card every month for it to work good for you. Just limit yourself to required purchases and don't fall into the trap of buying clothes, games, movies, etc with it so you don't overspend.

I also highly reccomend finding a card that gives you more points for where you are going to use it at.

You do want to carry a balance, but not too high--if your balance is too close to your available credit, that will bring your score down. Keep it at about 50% or lower.

Length of credit history is definitely a factor in your score though so you want to get that first card on the books asap. The longer the history the better and they count from the open date on whatever the oldest line of credit in your report is.

Also, make sure you go over the terms with a fine-toothed comb. Credit card companies are tricksy and not above rigging the system to cause you to accidentally rack up extra fees or interest because you assumed things about when your payment was due, grace periods, etc. If they have a website to make payments online, that's usually the quickest and surest way to do it. Don't get screwed by the mail.

Don't be late on a payment. Ever. Ever, ever. Often any benefits, low rates, etc you get will get nullified the first time you are late on a payment. In a flash, that affordable 12-14% card can become a 25-29% card. They can do that... any time they want for just about any reason so don't give them one.

They can and will also raise your rate if you're ever late on anything else that shows up on your credit report. So know what does and doesn't go into your report and keep it clean as a whistle or every creditor you have can turn around and give it to you up the poop chute.

Be choosy about what you apply for and make sure it's something you really want/need and that you have the credit score to get it. Each and every time that you apply for credit, the potential creditor makes an inquiry that goes on your credit report. It doesn't matter if you are accepted or rejected, an entry goes in your file and too many inquiries in a given time period brings down your credit score.

Seemingly unrelated areas of your life, like your auto insurance company or potential employers may also look at your credit score and judge you based on it. Another good reason to start strong and keep it clean.

In general you don't have to overthink it too hard when it comes to your credit score. Have 2-3 lines of revolving credit (credit cards, dept store cards, etc) with moderate balances, 1-2 loans (car loan, etc), pay your bills on time and you'll be fine.

I had an internship at JP Morgan Chase bank back in 2006, and I would recommend a Chase Freedom card. It offers the best rewards (cash back or points) and low interest even for somebody who has no credit. Plus you can make your payments online (although I assume most people do that now) and there are more Chase bank locations on the East Coast than anyother bank.

Unfortunately, I was fired from my internship after force-balancing my cashbox.

- Start small. Get a department store credit card or two, from Sears or Marshall Fields, staggered by 60 days. They don't have annual fees, expiration dates, or dynamic T&Cs, but count as "you've had a credit card for a long time".

- Get something with free rewards. Don't pay for some kind of rewards package on steroids. Stick with cash rewards and things that work like cash, not gimmicky certificates. If you have a debit card, get a free rewards program on it, too.

- Pay the balance. Don't maintain a balance. Sure, you'll get more credit, but at a higher %. Think of a good credit score as a "good credit" score. Anyone can borrow a ton of money, still. It's the rates that matter.

- Depending on where you work, ask if you can run a few company purchases with your credit card and get reimbursed to build it up. It might be a total non-starter, but you never know. Ask your folks if they'd put your name on their credit card for awhile.

- Terms and conditions can change at the drop of a hat, so don't get TOO hung up. You can review until you're blue in the face and get screwed. As long as it's "no annual fee", never cancel -- just don't use it anymore.

- Depending on how "you apply" for credit, a credit lookup won't influence your credit score. Lots of organizations an look up credit in a pre-screened way that won't come off as user-initiated, if you know how and what to ask.

- Check your credit report. Make sure it's clean and someone hasn't performed identity theft on you. Ignore the stupid TV commercials and go to http://www.annualcreditreport.com, the only truly-free credit reporting site.

- Depending on how "you apply" for credit, a credit lookup won't influence your credit score. Lots of organizations an look up credit in a pre-screened way that won't come off as user-initiated, if you know how and what to ask.

Can you elaborate on how this sort of exception to the normal process would work? I've never heard of anyone issuing a credit card without doing a regular credit check that shows up.

The way I understand it, you are correct that pre-screening inquiries do not count. The way this works is the creditor basically pays the reporting agency to provide a mailing list that fits a certain criteria. Your name got scooped up with hundreds or thousands of others and put on a mailing list but you haven't been approved for anything yet.

If you then respond to one of those offers and fill out their application, they will then do an inquiry on your credit report to see your specific information in detail and make a decision based on that.

That's why even though you might get an offer in the mail saying "pre-approved for up to $20,0000 at 8%" you apply and get back a card at 17% with a $1,200 limit. They run a credit check on you when you respond and issue (or don't issue) a card based on that.

Some credit cards and other offers will initiate a credit inquiry before they even send the credit card offer in the mail. Those never count against your credit rating. The one that comes to mind are AT&T-branded credit cards. At one point a few years back, AT&T sent me a credit card offer every two days for months. They did a pre-screen check every time, and my credit report one year was dominated by AT&T credit inquiries.

Also, some of the mortgage places (Rock Financial comes to mind, but I heard of others back when re-fi madness was afoot) would do credit inquiries that wouldn't show up as consumer initiated. They would have great incentive to NOT reduce the customer's credit rating as a result of doing the query, and understood that a lot of their customers were shopping around. You can go to most mortgage companies that pre-qualify for free and get your actual credit score for cheaper than directly buying it.

Having said all this, I really don't give a hoot about credit score. My credit is fine and I have no serious debt or need to borrow. I'm more concerned with the accuracy of credit reports, as I've posted about before.

Zekyl:
Don't listen to all these guys. You want to build credit? You go out and sign up for every credit card you can, and then use one or two to buy everything from a car to enough jewelry to get into a hot cheerleaders pants (unless said cheerleader likes drugs, then get her hooked on drugs so she'll love you forever, and when you're sick of her, shit, just kill her).
Now, here's the good part. Once you have about 75 or so cards, just start rotating the balances so you'll never have to make a payment.
Or do this (my patented Zip Goshboots 3 Year Plan to Having the Life You Want): You will soon be a recent graduate, which means you are probably broke, and pretty much unemployable and worthless. So you will need to move back in with your parents (unless you've never left, which is better for established residency purposes). Next: Get about 15 credit cards and keep them for two years, maintaining about a 100.00 balance on each one.
Now: Either you have applied for cards with extremely high credit limits (smart!) or they'll raise them to entice you into a spending frenzy the likes of which hasn't been seen since Imelda Marcos walked into the Dallas Shoe Warehouse.
NEXT: You oblige them. You buy every fucking thimg you'll need for the next ten years: A good car, some swank clothes (try to stay neutral so they don't go out of style. And no need for fancey suits, as I'm sure that as a recent colege graduate, your new employer, MacDonald's or WalMart will furnish you with a work uniform).
Next: Chapter 7 bankruptcy. You'll be back on your feet in two years, you'll have everything you need, and you may then even be able to score with The Ladies thanks to your swank car and your swank clothes.
And don't forget: You can buy booze with credit cards, so stock up on the good stuff when you bring The Ladies over for a night of begging for sex!

:cogent:

You should totally do that, Zekyl.

Don't forget the big splurge on Pistons playoff tickets for all your interweb friends.

:cogent:

You should totally do that, Zekyl.

And then the rest of america will pay for your unresponsible ways by covering your ass in bankruptcy.

But it will be fun for you!

Don't forget the big splurge on Pistons playoff tickets for all your interweb friends.
Drop me a PM when you get my tix, Zekyl. :)

And then the rest of america will pay for your unresponsible ways by covering your ass in bankruptcy.

But it will be fun for you!

Yes, because our government does so well managing the money already, and ALL taxpayers are responsible people who don't waste money, and wouldn't you rather pay to blow up Iraq than pay to have Zekyll go to Florida for spring break?

We need a WTF Morality Police emoticon.

Yea Zek, I prefer floor seating.

I think Zek should treat us all to a Spitzer.

People from Cleveland...have credit cards?

I didn't even know they had bank accounts.


Seriously, my advice (if it's been mentioned before, very sorry) is to add autopay to the card, where the balance is automatically paid off every month via your bank account (imaginary "Double Adamantium Super Shit Clevelandier" accounts do not count). This way, you'd better watch how you work the plastic, or else.

As you grow more comfortable (and wiser) with the card, you can remove the autopay.

I sure wish I'd thought of that when I had MY first card. Would've saved me a ton of headache.

Ok, but do I inform the parents that I'm moving back in or do they just come home from work one day to see me drinking a beer in my old room with all my stuff?

You want the surprise. A hooker in your lap makes it that much better. If she knows your mom, double bonus.

You want the surprise. A hooker in your lap makes it that much better. If she is your mom, double bonus.

Only in Cleveland.

Hmmm, I'll have to start making offers to people my mother knows, see what they're willing to do. Should they just be sitting on my lap or should my parents walk in mid-ride. I want to get this perfect.