Note: All Orchard Bank credit cards are now issued by Capital One.
There are a few credit card companies that will accept applications from students with bad credit. They include Capitol One, Orchard Bank and First Premier. You can choose either a Visa and MasterCard credit card.
The Capitol One Secured MasterCard is available for students with bad credit and depending on the amount of your deposit, you may be eligible for a maximum credit line of $3000. First Premier offers a MasterCard tied to a checking account with a pre-approved limit. Orchard Bank has both Visa and MasterCard that are secured credit cards for bad credit. All these credit card companies report to credit agencies regularly.
Because students who have bad credit have already exhibited negative behaviors with their credit very early in life, most financial institutions are not willing to invest in such a high risk candidate. Luckily, if you are applying for a credit card in an attempt to repair your credit, you do have some good options.
Are prepaid debit cards better for students?
This really depends on a few questions you need to ask yourself. What is the main reason you need a credit card? Will you use it exclusively, like for bills or grocery shopping? Are you trying to build your credit history? The answers will help determine what type of credit card you apply for.
Prepaid debit cards are not credit cards in the traditional sense. They cannot help you establish credit because they do not send any of your information to the credit bureaus. They are usually extensions of a bank account or purchased separately using cash. None of your purchases, transactions, or even payments is tracked or monitored.
Your credit history is a combination of this information and is often taken into consideration when calculating your score. Prepaid debit cards cannot assist you in this matter. Still, students may find prepaid debit cards useful in teaching them how to make responsible financial decisions because they can be used wherever Visa and MasterCard are accepted.
No matter which type of credit card you choose, you should have full knowledge of the obligations you have.
There can be annual fees you are responsible for, in addition to making monthly payments. You may even be subjected to extra expenses if your agreement stipulates you maintain a certain balance every month. Not having a proper perspective can have negative results.
How can I track my credit history?
If you are fairly new to credit and are unsure of your exact credit score, you can find everything you need by visiting, Annual Credit Report.com and following the simple step-by-step instructions. You will receive a complete history of your credit and have the opportunity to verify the contents are accurate.
Create a new habit where you review your credit history at least once per year, especially as a student. Because you are just starting out in the world of credit, you can fall victim to some of the more common mistakes that occur. Most people are not even aware of the pitfalls they may encounter, like inaccurate data and often panic when confronted with the situation.
Unfortunately, there can be dozens of reasons for mistakes, including human error. If you are not current with your credit history, it makes it much more challenging when you need to file a dispute with the credit bureaus. All three bureaus, TransUnion, Experian, and Equifax must be notified of the error. Under normal circumstances, your issue can be resolved within 30 to 60 days of filing.
Why is good credit so important for students?
Having a good credit score is extremely important because virtually every aspect of your life can be affected, from employment to purchasing a home. For these reasons, it is imperative that young people learn to respect credit cards and their purpose. Poor credit can lead to many unwanted consequences that will haunt you for years.
As you become more familiar with your credit history, you can begin to use alerts that will provide you with an update via text message or email when inquiries are made into your credit. This is an excellent feature to guard against things like identity theft and prevent credit card fraud.
Young adults have such wonderful opportunities to become financially independent today, but responsibility comes with these advantages. While it is important to obtain some level of credit, it is equally vital to pay heed to the common hazards they can present. You have all of the tools you need to achieve your goals as long as you remember to make smart decisions.