Establishing credit can be difficult, as doing so always seems to put applicants in a quandary. Lenders don’t want to hand out credit to just anyone; they want to give it to people who are qualified. That means people with good credit. But if you don’t have credit, who will extend it to you? Ah, there’s the rub. It’s an age old problem, and one that still holds true for many would-be applicants. For those enrolled in college, however, a different situation arises. College students often find themselves awash in credit card offers, as lenders want to grab the earliest opportunity to turn today’s students into lifelong credit card customers. Many, if not most, students take the bait, and the average college student now owes nearly $3000 at the time they graduate. That’s good for the credit card companies, but bad for the students, who are often burdened with student loans and other expenses on top of their new, high-interest credit card debt.

Given the risk that a student faces in taking on such debt, is applying for credit while still in college and relatively unemployed a good idea? It can be, if it is approached wisely. Establishing credit is tough, so one should always take advantage of any situation that helps, and being offered credit while in college is a great opportunity to do just that. Students should apply for one or two cards if the opportunities arise. What students should not do is spend like crazy fiends, assuming that credit equals income. Credit is simply an agreement to lend money at interest; it must be repaid. Students that understand that simple concept can take advantage of this unique opportunity to build credit early.

The savvy student will apply for several cards and once received, use them sparingly. An occasional compact disc purchase or a pizza, once a month, will give the card some use. The student then needs to pay back the bill, promptly, and in full. This process should be repeated for each card he or she has acquired. The idea is not to spend the money, the idea is to establish a history of responsible use of the card. The wise individual will use the card for the sorts of things that he or she might ordinarily pay for with cash, but simply pay later when the bill comes due. In a year or so, the credit bureaus will have noted this history of regular use and prompt, full payment. This goes down on the student’s credit report and helps build a healthy FICO score for them. A healthy credit score will come in handy after graduation, when that former student now needs to buy a car or a house. 

The average college student has several charge accounts and several thousand dollars in debt when he or she graduates from college. In all likelihood, he or she also has some damage to his or her FICO score. It doesn’t have to be that way. If you accept the cards, use them gently and wisely, you can establish credit that will have others envious. That is putting your college smarts to good use.