Credit tips for college students

The length of one's credit history is one of the various factors credit bureaus look at when formulating a credit score . Therefore, it may seem like a good idea to apply for credit early and often. A recent report by CBS MoneyWatch offered insight into how college students can do this, and also debunked some of the myths they apply to money management. The first is that credit cards are the only way to build credit. Auto loans, student loans and some personal loans will also contribute to an individual's credit report. Like credit cards, it is important to make payments on these on time. Falling behind is not only damaging to a credit report; it can also lead to elevated balances and interest. While many may enjoy the freedom associated with college, some students will need assistance from mom and dad in order to obtain a credit card account, according to the report. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 now limits availability of such products to those under age 21. Younger adults need a co-signer or evidence of income or assets in order to open an account. Students who do not have these options may be able to join their parents' card as a joint account holder, according to the report. Doing this can help them build up the credit needed to qualify for future loans, but can also put parents' strong credit histories at risk. Those looking for their first card should consider looking beyond the big name banks, according to the report. "While large banks may boast great deals and rates, as a young adult opening up a credit card for the first time, you may want to scour the offers from your local credit union first," the report said. "Credit unions generally offer the lowest annual percentage rates (APRs) on credit cards." These low rates can keep credit card payments affordable, further protecting consumers from falling behind on payments. Young consumers should also understand how other payment options may impact their credit score. Store credit cards often come with initial discounts and alert services, but may carry low limits that can be restrictive to a debt utilization ratio. While debit cards are a useful way to keep one's spending within their means, maintaining a strong balance on such accounts will not positively impact a credit score.