Build smart credit: Students should understand the system before opening

Kelli Fitzpatrick

Addison Spriggs opened a MasterCard account before starting at Kent State. Spriggs, junior biotechnology and biology major, said she opened the card in preparation for college costs.

“I only have a $500 limit, so I pay the full balance every month,” Spriggs said. She said she won’t have student loans to pay off after graduation, so a credit card is her way of building credit.

Spriggs is not the only student managing credit before graduation. According to a 2009 Sallie Mae report, 84 percent of the U.S. student population has credit cards. Building credit early with a credit card can help later on when taking out a home loan or purchasing a car.

But not all students are able to manage credit as carefully as Spriggs: According to the same report, 20 percent of college graduates have $7,000 in credit card debt. Add that to the average of $25,000 in student loan debt, and that twenty percent has a lot on their hands.

Opening a card

Kelly Paton, program coordinator of the Consumer Credit Counseling Service, a Family and Community Services program in Ravenna, said the first step before opening a card is understanding its foundation.

Think you have no credit? Check again

  • Even if a student has yet to build credit, he or she should check their credit report to ensure nothing has occurred without their knowledge.
  • “See if anything is on there,” Sukel said. “You could be a victim of fraud, or parents could have put something in your name.”
  • Sukel said, for example, parents sometimes put utilities under their child’s name, if they didn’t pay the bills and cannot put their names on it again. If the parents fail to pay for bills put under the child’s name, it will give him or her bad credit without realizing it.
  • “Avoid any surprises so you can apply for credit [in the future],” Sukel said.

Paton said a student should pay attention to terms, fees and interest rates to judge whether or not having a credit card would be manageable.

“There are creditors out there … that will target people without credit,” Paton said. “Those types of accounts oftentimes have very creative fees attached to them.”

Spriggs said she researched credit card options, and went with a card offered through her bank.

“I looked at fees and credit limits, and wanted a small limit in case it were ever stolen ­— I’d only be out $500,” Spriggs said.

Robert Sukel, program manager at the Akron location of Consumer Credit Counseling Service, said to pay strict attention to contracts.

“Before you enter a contract, regardless of how long it is, read it,” Sukel said. “If everything goes smoothly, it’s no big deal, but you have to know what can happen.”

Kyla McLaughlin, senior pre-pharmacy major, also opened a credit card with her bank before starting college. She said she wanted a card because she would be making big purchases for school, like textbooks each semester.

“My bank is Chase, and my parents banked with [them],” McLaughlin said. She said she didn’t look too much into it because they already had credit cards with the bank.

Getting credit help

  • For credit counseling and financial services, look for a counselor certified by the National Foundation for Credit Counseling at
  • Consumer Credit Counseling Service in Ravenna (330-297-0080) and Akron (330-376-9494)
  • Free services: budget assistance, savings strategies
  • Debt management program: $50 plus $10/month. Can access lower interest rates from creditors by working with this program.
  • Financial literacy program of budgeting, credit and basic banking classes
  • Compass Family and Community Services in Youngstown. 330-782-5664
  • Workforce development and financial stability program, financial education services

Budgeting and building credit

When considering a credit card, a student must ensure he or she can keep up with monthly payments.

“Maybe a lot of landlords will have a 15-day grace period for your rent … but the credit cards don’t have that kind of leniency,” Paton said. “Penalties and late fees can snowball very quickly.”

Also understand credit card debt cannot be forgiven, Paton said.

“You don’t have the option with credit cards to defer, like you might with student loans,” she said. Student loan payment may be deferred after 25 years.

Spriggs said she uses her card for textbooks and groceries. She budgets herself according to her monthly income and doesn’t charge more than she can afford.

Sukel added that students should also consider becoming an authorized user on a parent’s credit card. This way, students can build credit without having to pay the monthly bills. As long as the parent pays the bills and the student uses the credit responsibly, being an authorized user will build a credit history.

Whether students open their own card or use their parents’, Paton said students must understand the connotations of a budget. This refers to deciding before hand what are needs and what are wants.

“A big risk for people just getting into credit, especially [while] trying to get through school, is [that] the line between what you need [and] what you want becomes very fuzzy,” Paton said. “Use as much self-discipline as you can. Trying to pull a bad credit score up is just as challenging as establishing credit in the first place.”

McLaughlin said she only uses her card every two to three weeks for textbooks and gas but rarely for everyday items, because she knows managing credit can get out of hand.

“I have to watch because it’s just one swipe — it’s so easy,” she said. “I only use it for two basic things because I know about how much they will cost.”

Spriggs and McLaughlin both said they opened cards to establish credit before graduation. Most of a credit score comes from the user’s payment history.

Sukel said a student’s credit is important, but not necessarily the credit score.

Money hungry for more?

  • Take an economics class to understand the world of money. Principles of Microeconomics and Macroeconomics, Personal Finance and Money, Credit and Banking are all offered in Fall 2012.
  • Visit for available financial programs, counselors and classes with Family and Community Services.
  • Visit for information about establishing and managing credit.

“Don’t get hung up on your credit score,” he said. “That number, to you, is useless. If you have good credit, you’ll have a good score. Worry about what’s on the report.”

Sukel said a credit report shows credit history but not a specific score.

Maxing out available credit on the card every month will bring down the score, Paton said. Only paying the minimum payment, or no payment at all, will also hurt the credit score.

“Credit cards are the quickest way to build credit history,” she said. “There are a lot of conveniences to it, and some dangers that go hand in hand with that. Credit history does take a long time to build and even more time to recover if you have some damages.”

Contact Kelli Fitzpatrick at [email protected].