Establishing Credit History

bigtrees
Thu, 10 Jun 2010 13:03:22 +0000

“Building credit” is slightly overrated, and often used by those selling financial products as justification to take out a loan or be issued a credit card that you might not need otherwise.

Lack of credit history (which is different than a poor credit history) can hurt in one of three ways:

1) Make it harder to get a home loan (not a concern at this point)
2) Maybe make a car loan more difficult. Likely not to be a concern until she has steady income, which probably means after graduation. Even then, there are lots of places that are very interested in making car loans even to those with no credit history, as long as they have steady and verified income.
3) Cause her to put down deposits when renting an apartment. While more money up front, deposits are almost always refundable.

Misusing a credit card can lead:

1. Tens of thousands of dollars in charges

2. Bill collectors

3. Ruined credit (which will increase car insurance and make it more difficult to get certain jobs)

4. Huge amounts of stress.