I’ve been blown away by your responses to the new Ask the Readers feature, especially to yesterday’s question about what do do if you have no credit history. Here’s a story Derek e-mailed me about his first-hand experience safely building his credit score.
I am a college student, and I have a credit card. My parents and I have worked out a system for protecting me from possible credit card debt. Our system only worked because both my parents and I are very careful financially, but I think it might be useful to others out there, perhaps to parents with a son or daughter about to enter college.
The credit card was mine, and I could do whatever I wanted with it, but the bills were mailed to my parents’ house. Every month, they would pay the bill on time and in full, and then I would be responsible for reimbursing them.
This had several advantages.
- It allowed me to build up a perfect credit history, which will be useful down the road.
- It protected me from credit card debt — even if I had made a mistake in my spending, my credit limit as a college student is low enough that my parents would still have been able to pay the bill in full. I would of course have had to deal with very angry parents, but my credit score would not have been impacted, and I would not have gone into debt.
- Even though my address changed frequently because of holidays and moving to new residences, I never had to worry about changing my address with the credit card company because the bills were always sent to my parents’ house.
- If my parents agreed to pay for something I needed, such as school supplies or food, I could simply charge it to the credit card, and they would in turn agree that I didn’t have to pay them back for that portion of the bill.
I will graduate next semester, and without the safety net my parents provided, I have canceled my credit card, even though I was always able to use it responsibly. This was a good way for me to go into the “real world” with a perfect credit report, which I am sure will turn out to be a great asset.
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