Faculty and students shared their advice when it comes to getting a credit card and building a high credit score.
Student experiences
“The first credit card I got in my name, I got when I was 20, right after my mission. … My dad did his best to help me manage my credit card, but it’s still something I work on today,” former BYU-Idaho student Maxwell Schow said.
Schow reflected on what he would have done differently after about five years of building his credit.
“I would suggest to my younger self to wait on getting a credit card until I had more experience balancing a budget,” Schow said.
BYU student Annabelle Baker recently started her own journey with using credit for her personal finances.
“I just got my first credit card this past October. I use a Wells Fargo card and I use it often,” Baker said.
BYU professor of finance Tyler Shumway shared his advice and insights for students who have questions about credit card use.
“I think a large fraction of students have credit cards, like 80% or so. I think this is somewhat due to credit card companies offering special deals to students and students wanting to establish a credit profile early in their adulthood,” Shumway said.
It is important that students open their own credit accounts earlier rather than later, he said.
“Credit card companies have been marketing their products to students for a number of years,” Shumway said. “At the same time, parents and other people that advise students suggest that they establish a credit profile while they are in college.”
Annabelle Baker is an example of Shumway’s claims.
“My mom would be the best example because she’s mentioned to me what credit cards are and do several times. My dad has taught me more of the logistics and consequences that come with obtaining a card,” Baker said.
Words of advice
While students should consider opening credit accounts, misunderstanding how credit works could harm them if they are not careful, according to Utah State University student Ava Olsen.
“It’s a tool to build credit so you can one day buy a home. It’s not free money that you can spend if you don’t have it. You have to be smart. … (Credit) is a very hard thing to build up once you have wrecked it,” Olsen said.
Shumway broke down these warnings into manageable goals for students to set.
“While it makes sense for students to have credit cards, it is important that they continue to live within their means. They should budget carefully and avoid running a balance on their cards for more than a month,” Shumway said.
Olsen, as a newlywed student, shared a few tips and insights she believes a young credit card holder should know. She advised others to get a credit card as soon as possible to start building a high score and to always pay it off.
“Never spend more than 20% of the credit you have, and it is important to talk about this before getting married. If someone has a low credit score, it’s a red flag. Unless they just got their first card,” Olsen said.
Shumway offered some words of advice for students approaching using their first credit card. He shared how starting slow can help students manage their bills.
“Immediately after receiving a new credit card, a student (or anyone for that matter) should activate the card by calling the phone number provided. Then they should charge a relatively small amount (like for a meal or something) and wait to see how their statement will be delivered and how they can pay the bill. Starting slowly and avoiding ‘maxing out’ the card will help students get used to having credit while sticking to a budget,” Shumway said.
Resources
BYU offers courses such as Personal Finance for Self-Reliance, Principles of Finance and others that help provide students with the understanding needed to create a stable financial future.
There is a Wells Fargo Bank located within the BYU Store in the Wilkinson Student Center. This Wells Fargo location is available for opening new accounts, checking, cashing and using notary services. Appointments can be scheduled online.
