College Students are a Credit Card Company's Dream Come True

One in four college students leaves with more than $5,000 in debt, a TrueCredit.com study shows. One in 10 leaves with over $10,000 in debt.

When you’re just graduating college, getting your first real job, and trying to make it on your own, credit card debt is the last thing you need to worry about. You’ll have rent and utilities to pay, possibly a car note, and student loans if you used them. That’s more than enough for one 20-something, just out of college, to think about each month.

Before you head off to campus this fall, make sure you understand some basics that will help you stay out of credit card debt.
Credit Card Companies Love College Students

College students are a credit card company’s prime prospect. (If you haven’t seen the documentary Maxed Out, rent it before you step foot on campus.) They like to get you while you’re young for a couple of reasons. First, they have a strong hunch that your parents will bail you out if you run up your credit card bill. Second, you have a long credit life ahead of you. That means lots of years of interest payments for the credit card companies.

In the past, credit card companies were so hungry for college students, they approved applications even when students didn't meet the criteria. For example, a college student could get a credit card with no job, no verifiable income, no credit history, and even without a co-signer. Recent changes to credit card law now require credit card companies to verify a student's income before giving a credit card them a credit card. Students without income must get a cosigner to qualify.

If you see a credit card company on your campus, they've likely paid your college administrators a fee, sometimes millions of dollars, for the ability to market credit cards to you. Colleges also get a kickback from every credit card opened and sometimes a percentage of charges made. Credit card companies pay to sell credit cards to students because they're banking on students making up for it in interest charges and fees.
Did Someone Say "Free?"

Credit card companies truly understand the college demographic. You can tell by the marketing tactics they use to lure young adults into applying for new credit cards. These tactics mainly involve giving something away for "free."

Expect to see credit card company representatives on or near campus giving out free stuff for credit card applications. Law prohibits them from giving away tangible items like t-shirts or frisbees on campus, but the law doesn't forbid intangible items, like a coupon for a free sandwich at a local restaurant or a statement credit on your new credit card. And, credit card companies may even give away tangible items, just at a location that's off campus. Free things are nice, but this isn’t the way to sign up for a credit card. Shouldn't you be suspicious of a company who bends the rules to try to give you a product?

It isn't just a free sandwich you're getting when you sign up for a credit card. You're signing up for a ticket to the Broadway musical Debt starring you. Whether you attend or not, is up to you.
You'd Better Shop Around

When you’re ready for a credit card, don’t sign up for the first one that comes your way. Instead, comparison shop the way you would for a new car. Look at a few different credit cards and pick out the one that’s the best deal. At a minimum, your credit card should have no annual and a low interest rate. (See How to Choose a Student Credit Card.)

Tables and booths on and near campus is just one way credit card companies try to get to students. Now, they've started emailing students and soliciting credit card sign-ups on Facebook.
Federal Law on Credit Cards for College Students

Credit card companies are forbidden from giving credit cards to students and young adults under age 21 who don't have a steady income or a cosigner. However, the law doesn't specific what qualifies as income or what type of proof credit card companies must receive for credit cards.

The bottom line – no matter how attractive the card or the free gift may seem, you’re better off looking for your own credit card. Learn how to use credit responsibly so you’re not the one out of four that graduates with thousands in credit card debt.

READ MORE - College Students are a Credit Card Company's Dream Come True

How to Get a Free Credit Report When Denied Credit

The Fair Credit Reporting Act(FCRA) gives you the right to a free credit report when you’ve been denied credit. The law requires the company that denied you to send an adverse action letter to you. You then have 60 days to order your free credit report. This adverse action letter will include details about which credit bureau denied you and how to order your free credit report.
Here are links to the three credit bureau pages on ordering adverse action credit reports.
Free Credit Report Only From One Bureau

You can only order a free credit report when denied credit from the credit bureau who provided the report used in the decision. For example, if the lender used an Equifax credit report to deny your application, you ca
n only order a free Equifax credit report. Note that the company, not the credit bureau, made the decision not to lend.
No Free Credit Report When Credit's Not a Factor

You can only order the free credit report when denied credit when the information in your credit report was the reason you were denied. For example, if you were denied because your income was too low, you don’t qualify for a free credit report under this particular section of the Fair Credit Reporting Act.
You Still Get an Annual Credit Report

The credit report you get when you're denied credit is an extra credit report and doesn't have an impact on the annual credit report that you can order once a year from the three credit bureaus.

READ MORE - How to Get a Free Credit Report When Denied Credit

What to Fix On a Bad Credit Report

The specific steps to credit repair depends on what's on your credit report. Before you can start repairing your credit, you need to order your report and review it to stop the negative information. Many credit reports also include an explanation of the things that are negatively affecting your credit. That will give you an idea of what you need to fix to improve your credit.

Here are some of the most common credit report blemishes and some tips on how to fix them.
Any incorrect information that’s on your credit report
By far, the easiest thing to fix on your credit report is inaccurate information, relatively speaking of course. Clerical errors could easily lead to errors on your credit report. Don’t overlook these errors because they could be hurting your credit. Submit a credit report dispute to have inaccurate information removed.

Your payment history has the largest impact on your credit score. Late payments will hurt your credit score more than anything else since payment history is 35% of your FICO score. Get current on any accounts that are delinquent. If you have accounts that are 30- or 60-days late, make those payments to keep them from taking a toll on your credit. Once accounts pass 90-days late they're considered to be extremely delinquent.

Negotiate with creditors and debt collectors to remove charge-offs and collection accounts from your credit report. They don’t have to remove this information, but you may be able to talk them into doing it.
High and over-the-limit balances
Your level of debt has the second largest impact on your credit score - it's 30% of your FICO score. Ideally, your credit card balances should be at or below 30% of your credit limit. That means you’ll only have a $300 balance on a credit card with a $1,000 limit.

First, focus on bringing over-the-limit balances below your credit limit. Then, work on bringing all your credit card balances down to a more credit-friendly level.
Unpaid judgments

Simply put, pay any outstanding judgments. They’ll keep hurting your credit either until you’ve paid it or it falls off after seven years (or the statute of limitations if that time period is longer), whichever comes first.
Student loan default

Student loan default isn’t always permanent. Talk with your lender to find out what you can do to bring your student loan out of default. Often, you will have to make several months of timely payments before your student loan will be considered current.
Bankruptcy, Foreclosure, Paid Tax Liens, Paid Judgments

With these types of entries, there isn’t anything to “repair” unless the entry is inaccurate. In that case you'd use the dispute process to have the item removed from your credit report. You might have to also with work the courts and banks to have their records updated.

If bankruptcy or another serious delinquency is listed on your credit report, focus on rebuilding your credit by adding positive payment history and demonstrating you can manage your credit. If you can’t get approved for a regular credit card, apply for a secured credit card. Use the card to make small purchases and pay your bill in full every month.

READ MORE - What to Fix On a Bad Credit Report