Building credit during vet school

[pirateyoho]

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Hey guys,

I avoided credit cards like the plague during undergrad but have recently starting to run into some of the repercussions of not having a credit score (e.g., not getting certain discounts on my insurance). I know I can't avoid credit forever, and the most obvious choice seems to be to just break down and get a credit card, but I'm wondering how smart this would actually be since I'm only two months from starting vet school.

I'm going to be relying on student loans for my living expenses, and thus will be setting a tight budget for myself. If I used the card in accordance with this budget, like for gas and groceries or whatever, could I then use my student loans to make the card payments? Would that actually work to build up my credit score, since the student loan money itself is debt?

Anyone have experience with/suggestions for building credit during vet school?

 

[Coquette22]

That's what I did. Get a card with a low credit limit and $0 fee. Use it to pay every day expenses, and pay it off each month. Then you're not paying anything extra. Just don't treat those purchases like additional money and you'll be fine. I have an excellent credit score despite having $100,000 in student loans and not having much of a regular income for the past 4 years because I always pay everything off and have never missed a payment. I have heard though that every now and then you should use the card for a larger purchase ($100+) because if you only every use it for small things, it's a red flag.

 

[orca2011]

Same as above. I got my credit card through Bank of America Senior year of college. I use it at least a few times a month for certain purchases (groceries/gas, Spotify, etc) and just pay it off monthly (using my loan money). I've only ever worked during breaks throughout school, so I've never had any other significant source of income during the past couple of years. I'm well over $100,000 in educational debt but have a pretty decent (possibly excellent) credit score last time I checked. Just don't get like 5 credit cards at once and go crazy with them.

 

[sorasea]

Also pre-vet and astoundingly ignorant about financial things despite having an accountant for a mom. 😛

But from my understanding, yes to your questions. It's important to open up credit lines early when you can because the lifetime of your credit lines affects your credit score. I treat my credit card like a debit card. I pay it off in full every 2-3 weeks (and before my statement so that my statement shows a miniscule debt...I think your statement balance is also used to calculate your credit score, and you want to keep your credit utilization rate at a minimum). Higher credit limits are best but you may not be approved without a credit history. I started off with a student credit card through BoA with a low limit and $0 fee during undergrad, then got approved for one of those fancy high-fee high-limit high-reward travel credit cards that I now use for everything. The payoff in points has been worth it.

I believe student loans can also be good for your credit score if you make payments for them on time once you've graduated. I paid off my undergrad loans in one lump sum once I graduated and I kind of regret it...I've been told that making large payments over a few years would have been better for my score. But I also freak out about being in debt. 🙂

 

[pirateyoho]

Thanks all! I'm glad to hear that using student loans to pay off credit cards isn't counted against you. That was my main concern.

 

[Minnerbelle]

I don't see the downsides to getting a credit card. If you don't build up credit card debt, and use it like cash by paying off the balance regularly, you will only be building a credit history, and in case of emergencies you have a line of credit available.

I've had 2 credit cards (one I never use but keep because I've had it since I was 18 and is my oldest credit card, and an airline mileage card I use for essentially all my purchases). Between the two, I have like $13k line of credit available to me in case I need it. Emergency things happen, and it makes me comfortable knowing i can spend up to that much should I need to. Plus, it's much easier to dispute weird charges on my credit card.

 

[Minnerbelle]

Thanks all! I'm glad to hear that using student loans to pay off credit cards isn't counted against you. That was my main concern.

Yeah once that money's disbursed to you, it's not like they track what you do with it. You could blow it all on strippers and escorts if you wanted to.

 

[Doktor Timo]

In some ways, having a credit card makes budgeting easier because you don't have to worry about cash flow from a week to week basis if you have an income (say, from a spouse who works). As long as you are within your budget at the end of the month, you're good. I currently have two credit cards and a charge card and I have excellent credit despite my loans.

Plus, you can get great benefits from some cards. Im currently getting 6% cash back every month on all my grocery purchases.

 

[missdarjeeling]

If you're a responsible spender, there's no reason to be afraid of credit cards. I've had one since undergrad plus a Macy's card I opened up during grad school. Never missed a payment on either, so my credit score is pretty good. In recent months, with our move and with the length of time it took me to find a job, I stopped paying off the full balance, but my balances and interest are low enough that it's only cost me $5/month at most in interest charges. Carrying a balance isn't inherently bad and is sometimes necessary. It was scary for me to let go of that fear of carrying a balance, but it was also good to see that it wasn't the end of the world. With my first paycheck next week, I'll be paying all of it off anyway. The important thing is to never miss a payment and to always read the fine print. Be vigilant and disciplined, and you'll actually benefit from having a credit line.

As for student loan debt, it doesn't wreck your credit score unless you miss payments. I had to take out loans for my prereqs, and some of the money ended up going to bills and daily expenses like gas. It really isn't a problem.

Plus, it's much easier to dispute weird charges on my credit card.

Yeah, this is one of the reasons why I always use my credit card or swipe my debit as credit. Fraud protection is much stronger for credit, and you're also protected by the fact that there's a buffer between the vendor and your money. With debit, the money's automatically gone from your account. I had my wallet stolen while I was at a restaurant a few years ago, and the thief immediately used my debit card at a gas pump. Since they didn't have my PIN, they had to swipe as credit, and I alerted the bank to the theft fast enough that they dealt with the fraudulent charge themselves, and the money never left my account. You also have stronger protections with credit cards if you need to dispute a charge for another reason, like if a vendor screws you over somehow. You can't really do that if you pay with debit unless the vendor's willing to work with you. That sort of thing and the rewards like points and cash back deals are why I prefer credit or swiping as credit when possible.

 

[LetItSnow]

Yeah once that money's disbursed to you, it's not like they track what you do with it. You could blow it all on strippers and escorts if you wanted to.

BLOW IT? That's money well spent.

(As an aside, if you keep a spare 'emergency' credit card, you should still use it every once in a while. I actually had an account canceled once because it had gone several ... uh ... years without being used. I kept it solely for emergency purposes.)

 

[twelvetigers]

This is just a 'worked for us' thing, but my husband needed to get a credit card for work after putting it off for a long time. He ended up with the capital one journey card and it worked well for him. He now has a quicksilver card (Samuel j Jackson approves) and a much more substantial credit limit. It took about five years to build it up.

 

[EngrSC]

You definitely want good credit when it comes time to buy a house - every tenth of a percent interest can translate to a lot of money. When we bought our house we learned that paying off your credit card in full every single month doesn't hurt your credit score (obviously) but it won't get you to excellent either. The financial people we worked with during the mortgage process explained that there's a super ambiguous fine line that gets you to excellent. It's somewhere between paying your balance off each month in full and using less than 20% of your total credit line. Used wisely credit is a super good thing to have.

 

[KCgophervet]

BLOW IT? That's money well spent.

(As an aside, if you keep a spare 'emergency' credit card, you should still use it every once in a while. I actually had an account canceled once because it had gone several ... uh ... years without being used. I kept it solely for emergency purposes.)

I have one of those cards I never use. I did use it for my Netflix subscription though so it gets used every month... for a $9 charge 😛

 

[ADM1220]

The length of time you've had credit is important too. Open up a card, use it sparingly, or just let it sit there. Start building credit now for your future.

 

[TXvet]

Definitely start working on your credit ASAP. I would recommend starting if you can as a teenager (get on your parents cards as long as they have good credit) then once in college get your own card with a low credit line. Be vigilant about paying. It can take years to build your credit/FICO score.

 

[Cephal0pod]

Bumping this to ask those who are hopefully more fiscally savvy than I - can you apply for the "student" credit cards as a vet student/soon to be vet student? Does anyone have any experience with this?

 

[EngrSC]

Bumping this to ask those who are hopefully more fiscally savvy than I - can you apply for the "student" credit cards as a vet student/soon to be vet student? Does anyone have any experience with this?

What is the benefit of a 'student' credit card over a regular one? The ability to have a co-signer if you don't have enough credit? Better rewards? Lower APR?

Personally I would want a credit card that I could keep after finishing school because part of credit is length of credit history. My first credit card was a Discover card that I got at the age of 19. It has an obscene APR (like 14%) since I didn't have credit at the time. 10 years later I have a credit card with a significantly lower APR but I keep the original Discover account open simply for the length of credit history. I just use it once in a while to get gas or something so it remains open.

If you can't qualify for a 'regular' credit card then a 'student' one is better than nothing if your intent is to establish credit. I'm just unfamiliar with the benefits of a 'student' credit card over a 'regular' one Sorry that was long winded

 

[dyachei]

Bumping this to ask those who are hopefully more fiscally savvy than I - can you apply for the "student" credit cards as a vet student/soon to be vet student? Does anyone have any experience with this?

yes, vet school counts.

And I still have my student credit card. EngrSC, they tend to be easier to get with little to no credit.

 

[orca2011]

yes, vet school counts.

And I still have my student credit card. EngrSC, they tend to be easier to get with little to no credit.

This. Mine BoA was a student card and now it's just normal. They do typically have a lower credit limit too (or I was just given a lower one) but are definitely easier to get. I actually haven't gotten another credit card (besides store cards and I only really use my RedCard frequently) yet cause I applied once and got denied and I have a decent credit score. Planning on trying later this year as I want one that I can either get cash back/points for.

 

[LyraGardenia]

Bumping this to ask those who are hopefully more fiscally savvy than I - can you apply for the "student" credit cards as a vet student/soon to be vet student? Does anyone have any experience with this?

I somehow got a Discover student credit card when I wasn't a student at all. I got an offer in the mail and decided to try applying for it even though I had just finished undergrad. I got to the end and realized they wanted all these documents proving I was currently enrolled in classes, so I gave up and figured I just wouldn't get approved. Then about a week later my card showed up in the mail! I'm not sure what happened there, but that was two years ago and it hasn't been an issue.

 

[Doctor-S]

Anyone have experience with/suggestions for building credit during vet school?

Here are some general suggestions:

1. If you hold one credit card (e.g., a gasoline credit card with no annual fee) and pay the balance in full, and on time each month, it will help you to establish a credit history. Make sure you do NOT max out your credit card limit. Reason: you want to keep your credit utilization low; the amount owed on revolving credit makes up about 30% of your FICO score. So, you want to keep your credit card balance low (below 30% of your credit card's total limit). Do not max out your credit card limit.

2. Go to financial websites (such as Money and Kiplinger) and become better educated and informed about money, personal finance and credit. Become educated about financial terms. If possible, establish a professional relationship with a well-respected certified financial planner or a trustworthy investment advisor even if you're not making any investments at this time. Ask your family, co-workers and friends for referrals to well-qualified, experienced, knowledgeable and trustworthy financial advisors. Meet with the financial advisors and interview them. Many of them provide free consultations. Over time, you may want to consult with them about different financial matters - especially after you graduate from DVM school and begin your professional career as a new veterinarian.

3. Pay your credit card statements, on time, and every month, and before the payment due date expires.

4. If you pay your bills online, make sure you allow sufficient time for the payment to be transmitted from your bank to the creditor/lender. Some online payments take longer than a week to be received by the creditor/lender. If you miss the payment due date, your credit history will be dinged with a negative mark. Plus, you will be assessed late fees, etc.

5. In addition to revolving credit cards (e.g., gasoline credit cards) and student loans, some other ways to build a credit history include: obtaining secured credit cards, personal loans, utility bills, cell phone bills, Internet bills, co-signed auto loan, rent payments, etc. Read the terms for each issuer carefully. Always pay the amount due, on time, every month. Do not open multiple accounts at the same time because they will result in a negative entry on your FICO score. Lenders want to see that you have well-rounded money management skills, as well as a history of managing your accounts/payments properly.

6. Open and maintain a checking account, savings account, credit union account, brokerage account, etc. These accounts may (or may not) be noted on your FICO history.

Thank you.

 

[dyachei]

It also helps if you use the card monthly. Even for something like a pack of gum.