Q: I keep being denied a credit card so what do I do? I'm full-time college student and work one full-time job so I have income, but I need a credit card to build up my credit so I can buy a car.
Years ago, you wouldn't have been shocked to see first-year college students get starter credit cards just for setting foot in the nearest dining hall. Banks assigned lower-risk categories to students, assuming they'd earn higher-than-average incomes after graduation. But, the realities of a post-recession economy and pressure from consumer advocates stopped the flow of easy credit on campus.
Building a credit history at this stage of your life won't just help you get a better deal on a car loan. Insurance companies set policy rates based on your credit score, while employers in some states use credit reports during the hiring process.
Secured credit cards can help you establish the financial track record you'll need to achieve many of your future goals. You'll just need to set aside up to $300 for your refundable security deposit and between $25 and $50 for your non-refundable annual fee. I often recommend the Capital One® Secured MasterCard® credit card, but you can also get affordable secured credit cards from credit unions like PenFed, or from retail branch banks such as Bank of America and Wells Fargo.
Once you've opened your account, make a very small purchase once per month. When your balance hovers at around 1 percent of your available credit, that activity shows up on your credit report. Then, pay off your balance in full and repeat the process so you can avoid paying finance charges or late payment penalties. Over the following months, you'll notice an improvement in your credit score from the combination of on-time payments and low credit utilization.