How to Build Your Credit | Tips for Students, New US Residents, & Those Rebuilding Their Finances

One situation that’s come up on some of
my credit card consultations is being unable to get a card because of bad or non-existent
credit. This is especially frustrating for those that
want to jump into credit card rewards, but can’t because of past issues, or because
they don’t have any history, which is often the case with students and those who have
moved to the US. What’s going on, everyone? It’s Ernest from Trip Astute. In this video, I want to talk about strategies
to help build or establish your credit, especially if you’re a student, someone who’s had
financial struggles in the past, or a new resident in the US. (light chiming music) Getting started in the points and miles hobby
is tough since it does require you to have a solid credit history. Since most of us start this process early
in our adult life, it tends to be a time where we may not be as responsible or financially
stable. This means that we can often end up on the
wrong footing, and then have to work on getting our credit back on track. In fact, I had a rough start when I started. When I first entered active duty in the Air
Force, I was sent to a three-month training class in Biloxi, Mississippi. The original plan was to stay on-base while
I attended training. However, the base housing was full, so they
had me stay off-base in a Howard Johnson hotel. I was told that I would either have to charge
the hotel fees to my government credit card or have it charged to my personal card and
seek reimbursement. Since I hadn’t received a government credit
card, I thought I’d charge it to my personal card. And of course, I dreamed of all the cash back
that I would earn on my Citi Dividend card. Fast forward a few weeks, and I found myself
struggling to pay all the hotel charges. I didn’t have enough of a credit limit,
and my income wasn’t enough that I could just pay off the charges while I waited for
a reimbursement. I also took a hit to my credit score since
I had maxed out my credit card, which meant that my credit utilization was extremely high. I ended up asking for assistance and getting
moved back onto base. But it was a rough experience, and a good
reminder of how getting started can be tough. So today, I want to run through the strategy
for building your credit history and increasing your credit score and limits. This is especially important for those of
you that have had credit issues or mistakes in the past, students, and new residents in
the US. For a lot of you, this may not be an issue
since you have an established credit history and score. But I still think it’s important to know,
especially since many of us have people in our lives that are just starting out. Anything we can do help steer people toward
responsible and optimal credit use is a win in my book. But before we get started, if you’re new
here, welcome to our channel. Trip Astute is a travel channel that is focused
on sharing ways to make travel easier, affordable, and more enjoyable. Traveling can be stressful and expensive,
so we’re looking for ways to help you maximize your experience through travel tips, points
and miles, and innovative gear. If that sounds interesting to you, please
consider subscribing. Today I want to focus on three specific scenarios
that I’ve seen during my consultations where people are attempting to rebuild their credit. Students getting started in credit cards
Adults looking to rebuild their credit after financial problems
New residents to the US who don’t have any credit history So, let’s jump straight in. 1. Students getting started in credit cards:
If you’re a student and looking to get into credit card rewards, it can be tough. Much like my story earlier, you’re at an
age where you often don’t have much income and history that will allow you to qualify
for more premium travel cards. I know some people will recommend being an
authorized user on someone else’s account, like a family member or friend. While this can help to boost your credit score,
I don’t recommend it. Not only are you at the mercy of whether the
primary cardholder pays their bills on time, but it doesn’t hold as much weight as developing
your own credit. Plus, down the line, it can often show as
an open account in your credit history, which might hurt you when trying to get a new card. For this group, I usually recommend focusing
on student credit cards. These cards oftentimes reward you with higher
credit limits based on good payment and usage habits. Two cards that I recommend for students getting
started are the Capital One Journey Student Rewards and Discover It Cashback for Students. The Capital One Journey card has no annual
fee, offers 1.25% cash back when you pay your bill on-time, and increases your credit limit
if you make your first five payments on-time. Discover offers two cards for students. The Discover It Chrome for Students offers
2% of specific categories like gas stations and restaurants and 1% on everything else. The Discover It Cashback for Students is similar
to the Discover’s normal card with its 5% rotating categories every quarter. Both cards do not have an annual fee and even
give you an annual $20 credit each school year for maintaining a 3.0 or higher GPA. As of May 2019, Discover even matches the
cashback for the first year. Both cards are great starting points for students. The Capital One Journey might be more useful
if you’re traveling since it’s a Mastercard and doesn’t have any foreign transaction
fees. Discover also has no foreign transaction fees
but has much lower acceptance worldwide. 2. Adults looking to rebuild their credit after
financial problems: Life doesn’t always go as planned, and sometimes we can find ourselves
in situations of financial hardship. Even if you’re responsible with your finances,
a family emergency or job loss can cause a major disruption. And financial measures like bankruptcies are
extremely stressful, not just to your financial profile, but also to your emotional and physical
well-being. That being said, it is possible to rebuild
your credit. For this group, I generally recommend starting
with a secured credit card. These credit cards require that you make a
deposit on the card. As you use the card more and also deposit
additional money, you can unlock a higher credit limit. I know it may seem annoying to do so, but
it’s one the best way to prove your creditworthiness and improve your credit score and history. While there are several secured cards out
there, I recommend the Capital One Secured Mastercard and Discover It Secured. I like these two since you can eventually
product change them to other cards that may want to use and keep. Also, both cards do not have an annual fee
or foreign transaction fee. If you have an average score, then you could
also go for the Captial One QuickSilver One that offers a 1.5% cashback reward on all
purchases, but keep in mind that you’ll be paying an annual fee of $39, so it only
makes sense if you’re spending at least $2600 in order to breakeven. 3. New residents to the US who don’t have any
credit history: This group is near and dear to me. Since my partner Fiona is from the UK, she
had to build her credit in the US. She was very deliberate about her approach,
and after a few years of following a plan, she is now able to get premium travel rewards
cards. In fact, I think Fiona now has a higher credit
score than me and doesn’t seem to have any issues with getting approvals. I also have a close friend who moved to the
US almost ten years ago when she married her American husband. She recently decided that she wanted to get
into travel rewards, and applied for the Chase Sapphire Preferred. Interestingly enough, when she checked her
score on both Credit Karma and Credit Sesame, they showed two different pictures. Credit Sesame reported a 790 score, while
Credit Karma said that they could not load her score and history. She ended up being denied based on insufficient
credit history. We later figured out the issue. Even though she had a credit card in her wallet,
she was actually an authorized user on her husband’s account. And it seemed that her credit usage wasn’t
even reporting to all the credit bureaus. This means that she wasn’t building her
credit in the process. For this group, it’s similar to the previous
one. I would start with a secured credit card like
the Capital One Secured Mastercard and Discover It Secured. Again, the goal is to build your credit history
and score so you can start applying for the cards that will give you additional rewards. Also, building your credit is important when
trying to rent an apartment and get a loan or utility account. We take it for granted, but even things like
auto loans or mobile phone plans require a credit check. So it’s important to do it correctly so
you maximize opportunities in the future. In addition, here are some tips to keep in
mind for those you working to build your credit. 1. Be selective of your authorized user account:
If you decide to pursue an authorized user account, make sure you pick someone who is
not only responsible when it comes to paying their bills, but also has low utilization. That means that they are not using too much
of their available credit. Though as I mentioned earlier, I think it’s
better to build your own credit score and history, even if it’s with a secured credit
card. 2. Avoid prepaid credit cards: I’ve had people
tell me during their consultation that they use prepaid credit cards purchased from a
grocery or drug store. I don’t recommend this approach since it
doesn’t contribute to your credit score or history. You’re much better off going with a secured
credit card which can help build your score. 3. Consider less premium cards first: There is
a tendency in this hobby to move too fast and try to get premium cards before you’re
ready or qualified. If you’re in the process of building your
credit, you may be better off going with a less premium card first. This goes against the popular advice to get
the hardest cards first. However, for this situation, it makes more
sense. For example, if your goal is to get the Chase
Sapphire Preferred, you might be better served getting a Chase Freedom or Freedom Unlimited
first in order to build the relationship and show the issuer your creditworthiness. Plus, you can start earning points which you
can combine and redeem later with your Sapphire card. Of course, you’ll want to be cautious of
rules like Chase’s 5/24. But taking it slow and going for easier cards
can make it easier to get the more premium cards in the future. 4. Build a banking relationship: Getting a checking
account with the issuer that you want to pursue credit can make a difference when it comes
to getting their credit cards. I had a consultation with someone who tried
to get the Chase Sapphire Preferred but was denied due to having a low income. However, he had a long-standing bank account
with Chase, and when he tried applying in-branch, he was approved. So don’t underestimate the power of building
a long term relationship with the issue through a bank account. 5. Don’t rush the process: The biggest tendency
is to rush and try to get cards while a promotion is offered. For those of you trying to build your credit,
take it slow. This is a marathon and not a sprint, and there
will always be another promotion or even a newer and shinier card in the future. I know it can seem like a missed opportunity,
but in the long run, you’re better off building your credit slowly and methodically, rather
than just pushing through so quickly. Do you have any tips for those looking to
build their credit? I know many of you have gone through the process,
so please share so we can help others getting into credit card rewards and travel. If you’re interested in applying for a credit
card, whether it’s a secured or premium card, we would love it if you used our link
in the video description or on our website. It’s an easy way to support our channel,
especially if you’ve found our content to be valuable and helpful. Also, if you need any help with picking the
right credit card or developing a card strategy, sign-up for our free card consultation service. You basically fill out a questionnaire and
schedule a 15-minute video or audio call with me to review your recommendation. Hope you enjoyed the video and found it useful. If so, please give us a thumbs up and consider
sharing the video with others. It really helps us with growing our channel
and community. Until next time, travel safe and travel smart.

8 thoughts on “How to Build Your Credit | Tips for Students, New US Residents, & Those Rebuilding Their Finances

  • During a life changing event in 2015. Divorce&relocation, I rebuilt my credit from 465 FICO to 730plus FICO.

    Thanks for the content👍👍👍👍

  • Great Advice!!! I fell in financial ruin and had to rebuild my credit. Slowly and steady after a couple years with great payment history I was able to re-establish good credit… it just takes time.. I really enjoy watching your videos!!

  • 1) get a secured card for 6 months. You open it at a bank and put money in there.
    2) get a department store cards, like Macy's
    3) get a Discover credit card
    4) get a Chase card
    5) get an Amex card
    With credit card, make sure to pay at least the minimum payment if not the entire amount. Don't add an authorized users.

  • i have been applying non stop lol i just learned about this credit card game less than 3 months ago

  • I'm currently trying to build my credit. I went to the bank I have used for years and easily received a credit card. I use this card for everything ( I keep my debt card at home) every payday I take the money from my checking and pay of my credit card. Is this the best way to build my credit back up or should I be doing a 50/50 between the two cards?

  • My one piece of advice: stay away from Wells Fargo. Their credit cards are not very useful, they will close your account without warning, and their rewards points are not transferable anywhere. Better you keep your cash in a hole in the ground than keep it at Wells Fargo.

  • I recently was approved for Amex Gold, as I’m trying to increase my credit score I applied for Capital One Venture however I was declined.
    And when I received the declined letter is stated delinquency and late payment on the report. I’m confused as myFICO reports 720,680 and 731,What can I do to remove those negative from credit report. My goal is to purchase a home and that won’t look good for mortgage loan

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