I am by no means overly knowledgeable about money, credit, etc. I hope to be eventually, but in the meantime I am busy with other things in life. This, however, hasn't prevented me from making sure I am preparing for the future in the event that I start getting serious about it (money).
This is probably something someone like STR8UP could explain many times better than me (and I invite others to add their feedback/input), but the general point is, there are easily seen advantages to establishing credit.
1) Why you should establish credit
Although you probably won't really need the card itself until you are out of college, a credit card is a good thing to get right now. Once you are on your own, you are probably going to make some large purchases or take out big loans, and you will need to have something that says, "there's a good chance I'll pay you back, and within a reasonable amount of time." That's what your credit score does. If you have student loans, they will help a lot, but it still doesn't hurt to get a card. If you're like me and you have no student loans, you should definitely consider getting a credit card. If you ever plan on making a career out of playing with money, especially in real estate, you should establish credit as soon as possible (although I shouldn't have to tell you that).
2) If you use common sense, it is completely safe
One guy I know is a great example of how not to use a credit card. In short, he let $500 turn into over $1500 over the course of about a year. Why? He didn't pay the bill. He let a few extra dollars accumulate each month, ignoring the interest, and of course he had a very high interest rate since was a college student with no credit history. The entire time, he had a job, and made more than enough money to pay for it, but he ignored it. Bad idea.
The truth is, however, if you have a little self control and use common sense, you will have no problems. One of my friends suspected that he might get into trouble if he got a credit card and thought he shouldn't get one. After talking to him, he decided that he would get one, but would only allow himself to use it if he had the cash in his pocket. As long as you can trust yourself to follow your own rules, this is a guaranteed way to safely use a credit card and take steps towards getting a better rating.
Also, most credit cards have a "grace period" where you don't have to pay interest until after around 25-30 days. This means you can use your card, pay the balance off within a few weeks, and you will have paid no interest. Because of this, you shouldn't have to worry about your balance growing as long as you are punctual about your payments.
3) How to get started
The easiest credit card to get is a store credit card from somewhere that you visit occasionally, like a favorite store in the mall. It will act just like any other credit card but it will be for purchases from that store. Before you do anything, you might want to read something like this to get an idea of how credit cards work: http://money.howstuffworks.com/credit-card.htm
I went the more direct route and applied for an entry level credit card from Citibank. You can find something similar very easily, just do a little google-ing and compare different cards, then apply online. Most of these cards will be about the same; they will have a grace period of 20 or more days, no monthly fees, a credit limit of $500-$1000 but a high interest rate. They are safe as long as you pay off your balance before the grace period ends. The penalties are expensive for these cards, so pay your bills on time and stay aware of your credit limit so you don't go over it.
After about 6 months, I applied for a Blue for Students American Express card. The interest rate is significantly lower than my old card's, and my limit is $2000 instead of $700. I should be able to push this up to about $4000 over the next 6 months or so by applying for an increase in my limit, depending on how much I use it. I doubt that I will need that credit limit in the next few years, but as long as I am responsible about it, the higher my limit is, the better my score will be.
That is where I am at now, and it was very easy to get here. I don't spend too much money, I have a minimum wage job which is 10 hours a week. I know people who don't work and have better credit than I do.
A credit card is something that is better to consider sooner rather than later.
This is probably something someone like STR8UP could explain many times better than me (and I invite others to add their feedback/input), but the general point is, there are easily seen advantages to establishing credit.
1) Why you should establish credit
Although you probably won't really need the card itself until you are out of college, a credit card is a good thing to get right now. Once you are on your own, you are probably going to make some large purchases or take out big loans, and you will need to have something that says, "there's a good chance I'll pay you back, and within a reasonable amount of time." That's what your credit score does. If you have student loans, they will help a lot, but it still doesn't hurt to get a card. If you're like me and you have no student loans, you should definitely consider getting a credit card. If you ever plan on making a career out of playing with money, especially in real estate, you should establish credit as soon as possible (although I shouldn't have to tell you that).
2) If you use common sense, it is completely safe
One guy I know is a great example of how not to use a credit card. In short, he let $500 turn into over $1500 over the course of about a year. Why? He didn't pay the bill. He let a few extra dollars accumulate each month, ignoring the interest, and of course he had a very high interest rate since was a college student with no credit history. The entire time, he had a job, and made more than enough money to pay for it, but he ignored it. Bad idea.
The truth is, however, if you have a little self control and use common sense, you will have no problems. One of my friends suspected that he might get into trouble if he got a credit card and thought he shouldn't get one. After talking to him, he decided that he would get one, but would only allow himself to use it if he had the cash in his pocket. As long as you can trust yourself to follow your own rules, this is a guaranteed way to safely use a credit card and take steps towards getting a better rating.
Also, most credit cards have a "grace period" where you don't have to pay interest until after around 25-30 days. This means you can use your card, pay the balance off within a few weeks, and you will have paid no interest. Because of this, you shouldn't have to worry about your balance growing as long as you are punctual about your payments.
3) How to get started
The easiest credit card to get is a store credit card from somewhere that you visit occasionally, like a favorite store in the mall. It will act just like any other credit card but it will be for purchases from that store. Before you do anything, you might want to read something like this to get an idea of how credit cards work: http://money.howstuffworks.com/credit-card.htm
I went the more direct route and applied for an entry level credit card from Citibank. You can find something similar very easily, just do a little google-ing and compare different cards, then apply online. Most of these cards will be about the same; they will have a grace period of 20 or more days, no monthly fees, a credit limit of $500-$1000 but a high interest rate. They are safe as long as you pay off your balance before the grace period ends. The penalties are expensive for these cards, so pay your bills on time and stay aware of your credit limit so you don't go over it.
After about 6 months, I applied for a Blue for Students American Express card. The interest rate is significantly lower than my old card's, and my limit is $2000 instead of $700. I should be able to push this up to about $4000 over the next 6 months or so by applying for an increase in my limit, depending on how much I use it. I doubt that I will need that credit limit in the next few years, but as long as I am responsible about it, the higher my limit is, the better my score will be.
That is where I am at now, and it was very easy to get here. I don't spend too much money, I have a minimum wage job which is 10 hours a week. I know people who don't work and have better credit than I do.
A credit card is something that is better to consider sooner rather than later.
