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Scott Bilker is the founder of DebtSmart.com and the author of Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. Send your questions about money, credit, loans, mortgages, or debt, to him at: Scott Bilker, PO Box 563, Barnegat, NJ 08005-0563 or online at: http://www.debtsmart.com/askscott

Scott,

I'm so lost! I'm about to obtain my first credit card, and I do not know where to start or even how many to take out. What deal is the best? Do I look at the APR or the nice rewards they have? I'm just trying to establish a good credit history, because I am aware that you need one if you want to eventually buy a house/car. It's so hard to get the ball to start rolling--especially with the limited knowledge that I have. Thanks so much for your help.

Meri

I certainly understand how confused you can be at this time in your life when it comes to credit cards. In my last year of college, I had to turn to my credit cards for funding in order to finish school. It was very expensive paying high rates to finance that year. But as expensive as this was, it was still a good spending decision.

You're right about starting off with a good credit history. Your credit report is your financial résumé. Everyone looks at it--employers, landlords, insurance agents, etc.

Note: I know this is obvious-before you can start applying for credit cards, you need to have a checking account. Additionally, having a savings account will help.

The way I started to establish my credit was by using gas and department store credit cards because they are easiest to get. The key thing to remember is that when you get these cards, use them wisely. By that I mean use them to establish your credit. Do this by buying a few items and paying the bill in full each month. There is no need to do all your shopping at any one department store. Your goal is to show that you're using credit responsibly.

After obtaining a few of these cards, and using them wisely, I applied for, and received, many unsecured major credit cards. By following the same strategy of using them for small purchases, I was able to build my credit history in the positive.

This doesn't mean that you must initially start, as I did, with department store cards. You can start by going for it! Start by applying for a few good credit cards. By "good" I mean low rate cards. You probably won't get them at first, but I would give it a shot. Credit card companies are desperate to find profitable customers; college students are their primary targets!

Some reward cards may also offer good rates.  You should only apply for the cards that have rewards you can use. It doesn't make sense to apply for airline rewards if you don't fly anywhere. Personally, I like my Regal Entertainment Group card that sends me gift certificates for Regal theaters. I just took the family to see "The Brothers Grimm." The theater gave me two adult and three kid tickets, popcorn, soda, and $6! Now that's a reward!

Finding the best credit deal depends on how you use the card. Ask yourself: "What is my income?" "Do I have debt?" "Can I pay this off in-full each month?" I hope that since you don't have any credit cards, you don't have any existing debt. That being my assumption, I suggest taking a look at my list of DebtSmart featured cards. These cards are a great start!

Lastly, if you have trouble getting reward cards, major credit cards, or department store cards, then I suggest getting a secured credit card. This is a major credit card where the bank uses your savings account as collateral. Visit your local bank (where you have your accounts now) and ask about their secured credit cards. If they don't offer these cards, then visit other local banks.

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