Getting Credit After College
I'm a 23-year-old newspaper copy editor. Regarding your recent column on twentysomething financial angst, I agree with most everything you say except this passage: "Readers of this column know how strongly I feel that kids should avoid credit cards until they've had experience managing cash -- preferably until they're out of college."
I agree that kids should avoid credit cards, but they should establish some credit while in college, even if it's with a department store. I'm mostly glad my parents forbade me to have a credit card. But when I wanted to rent an apartment or finance a new car, I couldn't do it without them because I didn't have credit. Now my apartment and my car have my mom's name attached. If I default, it falls on her.
I hear you, and I agree. My column on financial prospects for twentysomethings dealt with several topics, so I didn't cover credit in depth. But I've long recommended that college students use a checking account with a debit card for their first couple of years, and then apply for a credit card before they graduate. They acquire both experience managing money and the maturity to pay their bills on time. I appreciate your not wanting to rely on your parents to co-sign (I'm sure they appreciate it, too). But don't be so hard on yourself. Having a credit card doesn't guarantee that you'd get a car loan, because dealers are often skittish about any young, first-time buyer. And just because you don't have a credit card doesn't mean you can't get one.
Start with the bank or credit union where you have your checking account. If it issues credit cards, it may be receptive to an application from a good customer like you.
Or follow your strategy of applying for a card from a retailer or department store. These cards are often easier to get than a major bankcard, and you can build a credit history in six months to a year by making purchases and paying on time.
Your quickest route to a MasterCard or Visa may be to apply for a secured card, which requires you to make a savings deposit equal to your credit line (see www.cardratings.org or www.cardweb.com). After six months to a year of on-time payments, ask to be upgraded to unsecured status. That way, you can qualify for a lower interest rate and an increased credit limit without adding to the savings account.