Q. I am a recent graduate with $ 66,000 school loans and continue to apply for credit cards and continue to be refused. Can I get a credit card with my loans? I don’t want to use the credit card to pay off the loans, I just want to build up my credit so I can move into my apartment at the end of the year.
A. There are several steps you can take to get a credit card and build your credit, even if you have a lot of student debt.
If you are routinely denied traditional credit cards, stop applying, said Steven Gallo, chartered accountant and personal finance specialist at US Financial Services in Fairfield.
He said repeated denials would only hurt your credit score.
First, said Gallo, think about why you might be turned down. Do you work, do you have a source of income? Have you had late payments on your student loans? Have you ever had credit problems?
“In my experience, just having $ 66,000 in student debt shouldn’t be the reason a credit card is turned down unless you have no source of income to show that you can repay the card, ”Gallo said.
Your only solution may be to get what is called a secure credit card, he said, noting that they are offered by many banks and lending institutions.
These cards are much easier to obtain because they require the applicant to deposit money into an account with the institution as a security deposit, ”he said. The rules for these types of credit cards vary from lender to lender, but they all work on the same principle, he said.
“You put funds into an account and you receive a credit card with a spending limit equal to or slightly greater than the amount deposited,” he said. “You can then use the card like any other credit card and by continuing to use it responsibly, you build your credit score and over time the bank will switch you to a traditional unsecured credit card.
It is important, when choosing a supplier, to choose one that bring back the card use for credit bureaus: Experian, TransUnion and Equifax.
Otherwise, your responsible use of credit will not be recognized.
“Be sure to carefully review with your lender of choice the guidelines for determining your credit limit and how and when you will get your security deposit back,” Gallo said. “Also ask what needs to happen before you can switch to a traditional card, because each lender has their own requirements. “
Good luck with your credit and your new apartment.
Email your questions to [email protected].
Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly electronic newsletter.