Hi Stephanie,
I love your website and it’s really helped me take initiative of my spending and savings habits. I’m 20 and I have pretty awful credit. I finally got my credit score and it’s 520. I have two credit cards that will be paid off no later than December and I have a few things on my report that I’m disputing?
What can I do now to drastically improve my credit? I now have a job and once everything is paid off I just want to make a big change so I can be on the path to having good credit. Any suggestions?
Thanks,
Corey

Corey, this probably isn’t what you want to hear, but what you’re doing right now is exactly right, and there isn’t a whole lot more you can do. Improving credit is, unfortunately, a rather slow process. But you are on the right path, so don’t lose hope!

Let’s take a quick look at the five elements that make up a credit score, just to see if there’s anything else you might do. From the Wikipedia entry on credit scores:

• 35% – punctuality of payment in the past (only includes payments later than 30 days past due)
• 30% – the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
• 15% – length of credit history
• 10% – types of credit used (installment, revolving, consumer finance)
• 10% – recent search for credit and/or amount of credit obtained recently

Punctuality of Payment
This is the largest chunk of your score, so it’s very important. This includes more than just payments on lines of credit – any bill that’s more than 30 days past due can show up here. Be sure to stay on top of your utilities, cell phone, car payments, credit cards… all of it! If you have to pay something late, make sure you don’t let it get to 30 days past due.

Ratio of Debt to Credit
As the second biggest chunk, this is more important than most people think. Once you’ve paid off your credit cards, you’ll probably want to start using them again (without carrying a balance). This will help you establish a series of on-time payments, which is good for the “Punctuality of Payment” chunk above. However, you don’t want to charge too much, or else you’ll throw off this chunk.

Even though you’re going to pay your cards off every month, try not to charge more than 30% of your total credit limit – across all of your cards. Remember that last bit – it’s the total debt on all of your cards out of the total credit limit of all your cards!

Length of Credit History
There’s nothing you can do to boost this, and it’s probably not one of your strong points, since you’re only 20 years old. Thankfully, it’s only 15% of your score, so don’t fret over it. However, there are one thing you can do to make sure you don’t hurt it – that is, don’t cancel your oldest card, if you can help it. Unless it’s an awful card with lots of ridiculous fees just for having it, keep it around for as long as you can.

Types of Credit Used
At only 10%, this isn’t hugely important. You’ll probably eventually end up with a car loan and a mortgage to balance this out, but for now, it’s more important to focus on other aspects.

Recent Credit Inquiries
Yep – just asking for credit hurts you. But not much, and not for long. There isn’t a whole lot you can do here either, except for simply not filling out every credit card application that comes in your mailbox! 😉

You’re doing good by paying off your cards and making a commitment to improve your score. Just focus on keeping your debt-to-credit ratio low and making payments on time, and you’ll see drastic improvement.

Jonathan over at My Money Blog did a post about the Best Credit Card for College Students. This isn’t the first time I’ve seen this, since it’s based on a CNN Money article. In fact, not only have I seen this information – I went ahead and applied for the recommended card back in early September.

The card in question, the mtvU Platinum Select Visa Card for College Students by Citibank, does seem like the ultimate credit card for college students. An intro 0% APR for balance transfers and purchases (which I was going to take advantage of), 5% back on restaurants, bookstores, record stores, movie theaters and video rental stores. And “bookstores” includes Amazon.com, where you can buy anything you could ever possibly want – and get 5% back.

Not only that, but the card also gives you Thank You Points for getting good grades! A 4.0 could get you a $20 gift card at one of the many, many stores included in the Thank You Network.

Sounds awesome, right? I wish I could give a glowing review of this card, but alas, I cannot. Because instead of actually getting the card, I ended up in application hell.

It started out pretty much daisies and roses. The online application process was exceedingly simple, and didn’t even ask for my household income! (That probably should have tipped me off that this was not actually going to go smoothly.) So I sent the application into cyberspace, and waited.

And waited. And waited. Finally, after about 3-4 weeks, I got a letter from Citibank. There was no indication as to whether I was approved or denied – it just said that they needed more information to verify my enrollment as a student. “Fine,” I thought, “That’s fair, since it’s a student card and all.” Except the “verification” was just the beginning of application hell.

In order to verify that I was a student, they wanted the following:

• A copy of my student ID, front and back, with a current enrollment sticker OR
• A copy of a paid tuition bill for the current semester
• AND a copy of a bill (from the last 90 days) for a land line phone (cannot be cell phone)
• and if the land line phone bill was not under my name, they would ALSO need a copy of one of my bank statements from the last 90 days.

Ugh. This was already starting to get annoying. First of all, my school doesn’t DO “current enrollment stickers” on our IDs, so it was going to have to be a copy of the tuition bill.

Secondly, I can count on one hand the number of college students I know who even have a land line. Luckily, I happen to be one of those – but only because I moved home to live with my parents this year. But, of the college students I know with land line phones – none of them have the bill in their name. Some of them don’t even get a bill, because their phone service is wrapped up in the school’s housing bill.

So, fine. I mailed in the obnoxious amount of paperwork to verify my “studentness,” and waited.

And waited. And waited. About two weeks later, I got a phone call from Citibank, just telling me to call them back (this was an answering machine message). Confused, I called the number, and the lady on the other end of the phone didn’t know why I was calling, either. Since the answering machine message hadn’t given me a reference number, I had to give the customer service agent my social security number in order for her to look up the account.

That’s a major loss of points guys – there are few things I hate as much as giving out my social security number, especially on the phone.

So the lady, who was very nice, actually, looked up my account and said that I needed to resend my tuition bill, because it was printed from a website, but didn’t contain an “http.” This was actually my fault – I don’t have a printer on my computer, so I’d saved the bill page and then took it to another computer to print. So I accepted my responsibility, and asked her was address I should send a properly-printed tuition bill to. (Note this now: nothing else was said about there being any other problems with the paperwork I had sent in.)

So I sent a new tuition bill in, and waited. But this time, I didn’t wait long! Two days later, before they could have possibly received the second tuition bill, I got an email from Citibank. An email saying “You have been denied because we could not verify your student enrollment.”

What?!?

I waited a couple days, to make sure the new tuition bill had time to get to them. And then I called again. This time I had a reference number, but because I couldn’t understand the customer service rep very well because of her accent, I ended up screwing up my “password” and then having to give her my social security number anyway.

It’s like nails on a chalkboard when I have to give out my social security number on the phone.

So she pulled up my account info, and said that there was a problem with my tuition bill. The problem this time was that it didn’t contain my social security number. “Well of course it doesn’t have my social security number on it! My school switched to not using our social security numbers because it’s a security risk!” I said. (Also, couldn’t they have mentioned this the first time I called?)

The women informed me that I would have to send in a copy of my student ID with a current enrollment sticker. I told her my school doesn’t do current enrollment stickers. She told me I would have to get the school to send a fax, on school letter head, with my reference number, my home address, and my social security number to Citibank.

And that’s where I gave up. I have no interest in going down to the Registrar’s office, and giving them all of my information, asking them to type it up and then fax it to Citibank. Nope – not worth my time.

The long and short of it is, if two or more of the following are true for you, don’t apply for the mtvU Platinum Select Visa Card for College Students:

• Your school doesn’t put “current enrollment stickers” on your ID.
• You tuition bill doesn’t have your social security number plastered on it.
• You don’t have a land line phone in your name.
• You don’t like giving out your social security number as if it were candy.

I can’t believe I let them pull my credit report for this. So lame!