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Consumer Advocates: Guard Credit Reports from Aggression

By Faye Mergel
Published: Friday, September 25th, 2009

Market analysts warn students about the aggressive marketing strategies that card issuers are taking. Starting February next year, card companies will be prohibited by federal law from signing up college students who are below 21 years old. This is part of the gradual implementation of the new credit law which kicked off last August. However, card companies are not giving up that easily.

Consumer Advocates: Guard Credit Reports from AggressionBy February 2010, 21-under students can no longer sign up for a card unless they can show proof of their ability to pay or have someone, like a parent, to co-sign for them. This means millions, and possibly billions, of dollars lost for card issuers by 2010. As of April this year, 84 percent of the whole student populations in the United States are cardholders and only 2 percent of collegians have no credit history. This make schools a huge market for lenders. Consumer advocates worry that these lenders will be more aggressive as they take advantage of their last chance to sign up young students.

With students facing the threat of aggressive marketers, it is time for parents to aid the youngsters. Experts tell parents to talk to their children about credit card issues and debt management. They should also tell youngsters how important a good credit report is. However, experts add that parents can do more than give advice. They can actually let their children use their own cards in order to help these students start their credit history early.

A student can become an authorized user on his parent’s credit card. When he uses the card for buying something, the purchase will be recorded under his name. This information will be sent to the bureau, thus allowing him to start his own history in a less risky way. A parent can easily keep track of his child’s spending since the card is still under his name. Moreover, a parent can remove his child as an authorized user if he does not use the privilege wisely.

Many consumers, who start their credit history early, start by being cardholders. With a longer history, a person can easily apply for a mortgage or car loan. Some experts even advise students to start their history while in college. However, the strategy could ricochet if a student mishandles his cards. This will have serious effects on his credit report since any mistake can stay in a report for seven years. Specialists tell students to think twice before signing up for anything and to be mindful of the consequences it can have in their financial future.

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