Having a long credit history is super important for things like mortgages. Fortunately, there are some easy ways to get started.
Here are some tips, assuming that you are a responsible person and will not go crazy, this is just for building credit, not for actually using them.
There are two cards that work for college kids
- Discover has a free card that is easy to get, you get a low credit limit, but what you want to is to put something that is a low dollar amount, like a cell phone bill and set it to autopay, the credit bureaus will see this as you being a reliable payer.
- Chase Freedom. You get a 1.5% rebate which is pretty good. Money is money. It’s also a Visa card, so in emergencies you can use it. Do the same regular payment thing.
- Authorized User. Now if you are really responsible and your parents have good credit, then you can become an authorized user. Their credit rating (hopefully good) “transfers to you” and this should land you with a high rating right away.
- Uber Visa. They have made this very easy to get and you get 5% off of Uber with a $500 balance.
- And to reiterate, do not actually run balances on these
For New Grads
Congratulations, you hopefully have a real job now, now the game changes a bit and that $500 card doesn’t work and if you travel there are those pesky transaction fees. So here are some cards to think about:
- For your primary card, you need to look at your habits, but if you don’t travel much, then a Chase Sapphire card is a good bet. You get Chase points which don’t devalue as easily as say an airline and you can transfer them around. Also you get 1 point or about 2.2% on ordinary purchases. And for travel and dining you get 2 points which is a decent 4.4% redemption. Plus, you get 60K points just for joining and spending $4K in the first 3 months. (Hint, if your parents are generous, maybe they will redirect some spend to you). Again, don’t run up balances, set it for autopay and live within your means.
- Now load up on free cards, this is because the longer you have a card the better, that counts. So depending on your habits some good ones are REI MasterCard, Nordstrom Visa, Amazon Visa and Costco Visa These are all free and if you go there regularly, again you establish a regular history. Plus, they give you 5%, 2%, 3% and 2% off respectively for purchases in those places.
- If you are a consultant and travel a lot for work, then the other card to add is the American Express Platinum card. This is a hard card to get unless you are a software developer, but it is worth it to try for it. It does cost $450, but it includes $200 of Uber credits, $200 of airline incidental expenses (think booking, baggage and what you eat on the plane) and $100 of Saks credits.
- The other card in the same domain is the Chase Sapphire Reserve, which is similarly expensive, but it doesn’t have that Uber thing that make the Amex Platinum so compelling.