How can I build credit without a credit card?

A great way to build credit without using a credit card is by taking out different types of loans. Now, we’re not saying you should take out a car or student loan, but if you have them already, that can work in your favor. Making those car and student loan payments on time helps build your credit history and shows that you not only are reliable, but you can use different types of loans for different situations. Also, signing up for utilities in your name helps build your credit. While it won’t establish a credit score, it can help first-time borrowers because it shows a history of responsible financial transactions.

If you’re still curious how to obtain credit without having it, here are two resources that can help guide you in the right direction: “Build Credit – Learn How to Establish a Solid Credit History” and “How to Establish Credit.”

Written by Alex Ziskind, University of Illinois USFSCO Student Money Management Center

Tweet Chats

Join the USFSCO Student Money Management Center every Thursday at 4 p.m. (CST) for a dynamic way to interact and talk with your peers on a variety of personal finance topics. Think of it as a weekly coffee date with your friends where you can share ideas on how to have a frugal Valentine’s Day or how to repay student loans. For a list of topics we cover, check here: http://go.uillinois.edu/smmctweetchats.

In order to join the conversation on Twitter, just follow us at @ILStudentMoney, search the hashtag #UIMoney, and use that hashtag to ask and answer questions. Tweet ya on Thursday!

Written by Alex Ziskind, University of Illinois USFSCO Student Money Management Center

Can I get a credit card if I don’t have any credit or a job?

The answer is complicated. Trying to get credit without having credit is a catch-22, because you need credit to build credit. Fortunately, there are some loopholes to this situation.

For one, you can build credit by getting a secured credit card from your bank or credit union. The different between a secured card versus a traditional credit card is that you must deposit money in a savings account before using the credit card. Therefore, any spending you do with the card is “secured” by the money you deposited. Keep in mind a secured credit card is different than prepaid debit card; you can’t build credit with a prepaid debit card, but you can with a secured credit card.

If you’re still curious how to obtain credit without having it or a job, here are two resources that can help guide you in the right direction: “Build Credit – Learn How to Establish a Solid Credit History” and “How to Establish Credit.”

An important law that dictates whether or not you can get a credit card is the Credit Card Act of 2009. This law states that if you’re under the age of 21, you cannot get a credit card unless you have a cosigner or proof of your ability to repay the lender. A secured credit card is also a good way to establish credit if you’re under 21 since it shows you have the ability to pay up to the amount that is deposited in the savings account associated with the secured credit card.

Written by Alex Ziskind and Andrea Pellegrini, University of Illinois USFSCO Student Money Management Center

Get your deposit back!

When moving out of your apartment, the most common issue you might encounter is with the security or damage deposit refund. Cleaning the apartment thoroughly upon move out and taking pictures will help save you money. Sometimes landlords keep the entire deposit and charge the tenants more! Protect your money and CLEAN! CLEAN! CLEAN! & snap pictures of the condition that you’ve left the apartment in. If the landlord does not provide you with an itemized list of damages before deducting from your deposit, and/or provides you with a refund check that is less than the full amount, do not cash the check.

Have questions? Contact the Tenant Union by submitting an information request form: http://tenantunion.illinois.edu/RequestInfo.aspx.

Happy saving!

Written by Tanisha King-Taylor, Tenant Union

Upcoming Financial Literacy Events!

On our campus:

“Borrowing Trouble? Student Loans, the Cost of Borrowing , and Implications for the Effectiveness of Needs-Based Grant Aid”
Ben Marx, Assistant Professor – Department of Economics at Illinois
April 9, 2014 – 12:00pm
IGPA Giertz Conference Room, 1007 West Nevada, Urbana, IL 61801

In this paper, we estimate the impact of need-based grant aid on City University of New York (CUNY) students’ borrowing and educational attainment using regression discontinuity and regression kink designs. Pell Grant aid reduces borrowing: on average, an additional dollar of Pell Grant aid leads to $0.37 reduction in federal loans. Among borrowers, a dollar of Pell Grant aid crowds-out over $1.60 of loans. We develop a simple model that illustrates our findings are consistent with students facing a fixed cost of incurring debt. We show that in the presence of such a fixed cost, additional grant aid may decrease some students’ educational attainment. Empirically, we find no evidence that Pell Grant aid increases educational attainment, and can rule out impacts as small as a $1000 increase in Pell Grant aid leading to an additional 3 credits. Finally, we show that the fixed cost has economically meaningful impacts on behavior: we estimate that relaxing it would increase the borrowing rate by 60 percent.

Please contact Angela Clark Terrall at aclark3@illinois.edu or 217-333-3340 if you would like to schedule a meeting with our speaker or be removed from our email list.

Elsewhere:

Personal Finance for PhDs: A Guided Q&A with Amy Salo, CFP®
April 9 @ 6:00 PM – 8:00 PM | $20

6:00 – 6:30 PM               Wine, hors d’oeuvres, informal networking
6:30 – 7:30 PM               Guided Q&A with Amy Salo, CFP®
7:30 – 8:00 PM               Informal networking continued

This workshop will focus squarely on the financial concerns of those who have earned, or are in the process of earning, a PhD. Amy will review the three layers of optimal financial balance: protection, savings, and debt management. She will address concerns specific to PhDs, including the crippling effect of over-thinking, opportunity costs, future challenges posed by deferred retirement savings, and the importance of getting your financial priorities right.

There is a finite amount of money flowing through your balance sheet during your working life.  We can’t know in advance exactly what that number will be, but we do know that once it is in our rear view mirror, we can’t change it. Amy will help participants move toward a confident, clear path for making the most of opportunities.  Money is not created by stress or avoidance. We can only optimize what it is that we are working with, protect it, save it, and always, always make it work for us.

Co-Sponsored by PhDs at Work and  NYU Wasserman Center for Career Development