How to get your first credit card as an international student

Shannon Makenna
Sep 3, 2018 · 6 min read

As a Kenyan student studying at an American college with no credit history, I was nervous about getting into consumer debt because I’ve read countless articles on the burden of consumer debt that plagues a lot of Americans. Back at home, credit cards are not as ubiquitous as they are here in the U.S. Debt in Kenya is usually in the form of a car loan or a mortgage to finance your home. Other than that you would rarely find credit cards being used on a daily basis to buy items like clothes or pay for dinner. I, therefore, did not know about how credit cards worked. I never had a talk with my parents about them and it was never discussed in school. So I came into the credit card world with absolutely no prior knowledge.

In my first two years of college, I did not get a credit card because I was working minimum wage jobs in school and I did not want to dig myself into a hole I could not get out of. However, this summer I got a paid internship and I had a little more extra change in my pocket. So I decided I might as well get a credit card and start building my credit history. Ironically, at the time that I decided to shop for a credit card, I was listening to the audiobook The Total Money Makeover by Dave Ramsey. For those who do not know Dave Ramsey, he is the poster child for living a debt-free lifestyle. He is totally against credit cards. His philosophy is if you want it, save for it and buy it. But I’m in my 20’s I have zero patience. Plus I want to feel grown! There’s nothing more grown up than debt!

All jokes aside, the reason I decided to get a credit card was to build my credit history. In less than 2 years, I will be graduating and will have to take up a lot more responsibility. I will have to get an apartment for myself and pay rent. I don’t have a car but I plan to buy one after working for a while. This is assuming I’ll get a full-time job, which should be guaranteed after 4 years of college, but nothing is guaranteed these days.

Having a good credit history can help when searching for an apartment and for getting lower interest rates when buying a car. A landlord would like to see that you have a good history of paying your credit bills on time so that she can trust that you will pay your rent on time. Not all landlords will ask to see a credit history but most will. As for car loans, those with a lower credit score can get a higher interest rate and may even affect your down payment.

Having a good credit history can help when searching for an apartment and for getting lower interest rates when buying a car.

So what exactly is a credit score? A credit score is a financial report card that tells lenders how creditworthy you are. When you get a credit card, or any type of debt, how well you maintain your debt is summarized by a credit score. FICO Scores are the most widely used credit scores. Your FICO credit scores are reported to three credit bureaus: Equifax, TransUnion, and Experian. Your credit card provider is not obligated to send your history of payment to all three credit bureaus, but a good credit card provider should. These scores range from 300–850. A low score means you are deemed a risk by lenders while a high credit score means you have a good history of paying your debt.
At this time, I have a score of 300 since I do not have any credit history. After reading a couple of articles and watching some YouTube videos, I kinda know how to maintain a credit card, but I am in no way an expert, so this is just my opinion.

How to build your credit history from the ground up

  1. Know that building your credit history will take time. Be patient about it. Don’t expect to be in 780–850 zone in less than a year.
  2. Pay your credit bill on time. This sounds obvious enough for one not to miss but I cannot stress this enough. Pay your credit bill on time! Your payment history accounts for 35% of your FICCO score. If you have no credit history you’ll only qualify for cards with really high APRs (20% + ). This means any balance on your credit card that is not paid by the billing date will accrue a high interest. If you pay your ending balance each month you will only pay what you owe with no interest. That is why you should not just pay the minimum payment but make sure you do not carry a balance on your credit card month to month.
  3. Keep your credit utilization rate low, preferably 30% and below. Credit utilization ratio is how much credit you are using vs how much you actually have. This ratio accounts for 30% of your FICCO score.For example, my credit card has a $200 limit, for me to have a 30% utilization ratio, I can only use up to $60. (60/200 *100%) = 30%. A low utilization ratio means that you are far from overspending which is a good sign to lenders.
  4. Use your credit card to buy regular purchases like groceries, Spotify and Netflix subscription etc. By doing this you’ll be building credit while still maintaining the lifestyle you had before a credit card. Don’t think of a credit card like the ticket to your dream vacation. Don’t get a credit card to have a life you cannot afford. Use it wisely. Your main goal should be to build your credit history.
  5. If you can, pay your credit card bill twice a month. Your credit history will show the balance on the day the credit company reports to the credit bureau. Most of the time it happens at the end of the month, it could happen on the 27th instead of the 30th of that month. You have no control over it. If you pay half of your bill on the 15th of every month, and the other half at the end of the month, you will always be assured that you have a low balance on your credit card.
  6. When starting out, have a maximum of two credit cards. Don’t get a credit card that will be hard to maintain then close it. Every time you close a credit card account it will negatively impact your credit score. Start with one credit card, when you feel like you have a handle of it, you can get another credit card this will give you more credit to use, hence you can use more credit and still keep your utilization ratio low.

What Credit Card did I get and why

After shopping around on Nerd Wallet I decided to settle on the Discover it Secured Credit card. I chose this credit card because of 3 things.

  1. It is a secured credit card. This means you have to pay a deposit equal to your credit limit before getting it. This is for people with a poor credit score. Basically, it is a credit card on training wheels. After 8 months, your account is reviewed to see if you can move to an unsecured line of credit.
  2. My credit payment history is reported to all 3 credit bureaus.
  3. No annual fee.

The APR is 24.74% which is ridiculously high, but again I have no credit history so this is expected plus the interest rate is only a problem if you carry a balance on your card month to month. Which I don’t intend on doing.

In a snapshot, building a good credit history takes time. Be patient. Don’t carry forward a balance on your credit card, keep your utilization ratio low, and take a photo of your new credit card post it on your Instagram, and bask in the rays of #adulting.

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