How To Build Credit Without Credit

So in our grown up lives we need grown up things like credit.  We need a credit score for grown up purchases like a car, renting an apartment, etc.  When I was in college, I went to the bank to deal with a couple of…banking things and the teller and I did some small talking – you know the type of small talk you do with your dentist – where do you go to school, where do you work?   When I told the teller I was a senior in college, he was quick to ask me if I have a credit card.  I told him I didn’t.  I then waited for his utterly shocked facial expression to leave his face.

Well you should really get a card, you know.  If you want to buy a car, rent an apartment, etc you’re going to need one.

He gave me the sales pitch on the card the bank offered that was most suitable for students.

You’ll get approved.  Students are always approved.

So I apply.  And I get declined.  Why?  No credit score.  I apply again.  For a different card.  I’m declined.  No credit score.  Okay, credit card world – how am I supposed to get a score if I need a card to build one, but I can’t get a card?  Exhausting.  Finally, I’m approved for a cash rewards card that has a $500 limit and an annual fee.  I’ve read some horror stories about credit card debt and how Americans have more credit card debt than money in savings, etc., etc., so I was a little freaked out by it. I figured out some ways I could get the most benefit from the cash rewards program and build credit without falling into the habit of always resorting to the card.

Here are some helpful tips in dealing with or searching for a new credit card:

1. Come up with a system.  I researched what purchases offered the best cash back rewards which was gas and groceries, and I decided I would only use the card for these purchases. Find a staple and use your card for this staple. This will prevent you from maxing out your card at Target.

2. Do your research! There’s always fine print and the fine print needs to be read so you know what you’re getting yourself into.  Make sure the stores you’re using your card at qualify as ‘cash back’ stores.  For example, a mom and pop gas station might not qualify as Chevron would.

3. Pay, pay, pay.  Budget out your money so you’re able to pay the bill in full each month. This will help you to build a good score at a faster pace.

What are some challenges you’ve faced in taking that plunge into adulthood?