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04/27/2008

Recent Grads Can Obtain Good Credit without a Card

It is hard enough for college graduates today to leave school having accrued so much debt from student loans, but now kids are leaving college with credit card debt as well. Many kids feel the need to get a credit card as they enter college to help them out with bills, gas, rent and furniture among other things. It starts out innocently, but the inexperienced use of a credit card can lead to huge financial messes. Upon graduation, many find themselves needing to work an extra job just to keep the collections agencies at bay. This is a difficult way to start out your adult life.

Credit is initially seducing, yet can quickly become overwhelming. Also, many young people are mislead to believe that the only way to build good credit is to get a credit card in the first place. This just isn't true.

There are many ways to build up credit without dealing with the risks of a spend-happy credit card. Your overall credit rating is influenced by paying your bills on time. There are sites that you can sign up with that will keep track of your rent, cell phone, gas bills, etc., and give you credit based on your timeliness of payment. Traditional credit scores only include these bills if you are late or default on payments. Go to the Payment Rebuilding Builds Credit ® site, www.prbc.com to set up an account. The account is free to set up. You do have to pay if you want PRBC to include their report in your credit file. You can even sign up for a PRBC partner site that will automatically pay your bills through your account (much like what most major banks offer). This will guarantee on-time payment and your receipt of credit.

PRBC collects information from you about your bills and then monitors them to make sure you are paying on time. With this information they compile their "Bill Payment Score" that they will only release with your permission. You can also view your score with them at any time for no fee. PRBC is not affiliated with the "big three" credit bureaus and doesn't share any of your information with them.

Fair Isaac also has a similar new system that helps you build credit with on-time payments. Either way you want to do it, this alternative credit score can save you quite a bit on mortgages and other loans.

So, whether you are a young person struggling to build your credit or someone who has had some bad luck and received a poor credit score, don't automatically get a credit card to give a boost to your credit. Credit cards can lead you into more debt and even worse credit scores. Let those that are willing reward you for being a responsible bill-payer, after all, that's the truest sign of a mature, fiscally responsible person.

Kathryn Foster is a freelance writer based in Portland, Oregon.





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