Build Credit Without a Credit Card

• I am a senior in high school. How can I get a credit card when I turn 18?
• I need a computer for college. It's going to cost about $2,000. I don't have the money, so I was thinking about getting a credit card.
• I am 18 and am planning to move out, but I still don't have a bank account. What can I do to apply for a credit card?

I'm always amazed that so many young people think they're automatically entitled to a credit card when they turn 18. If we've learned anything from the credit woes afflicting so many Americans, it's that credit isn't an entitlement; it's a privilege and a responsibility.

And judging by the questions I get (like those above), it's a responsibility that most 18-year-olds aren't mature enough to handle. If you can't afford to buy a computer with cash, you can't afford to buy it on credit.

And if you don't know how to manage a bank account, you aren't ready for a credit card. As readers of this column know, I firmly believe that young people need to learn how to manage cash before they get credit, first with an ATM card, then with a checking account and a debit card. (See Financial Milestones for Kids and Best Time for First Credit Card for more.)

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Getting credit generally isn't a problem for college students. Card issuers are happy to sign them up because Mom and Dad are still in the wings to bail them out if necessary.

It can be tougher if young people are on their own and have no credit history, but it's getting easier. Fair Isaac, which compiles the FICO credit score, has also developed its Expansion Score, which uses nontraditional information, such as how an applicant pays for rent and other recurring bills.

You can also build your own payment history at Payment Reporting Builds Credit, an alternative credit bureau that gathers data on rent and recurring payments for cable, cell phone, insurance, utility and other bills. Enter your info into a Web file, which PRBC charges a fee of $15 to $20 to verify, or set up an automatic bill-payment system through your bank or credit union and have the records sent to PRBC.

The surest way to get credit if you don't have it is to apply for a secured card at a site such as Credit.com or CardTrak.com. With a secured card, you make a savings deposit equal to your credit limit. Secured cards generally charge high interest rates plus an annual fee. Steer clear of cards that have setup fees.

But after paying your bills on time for about a year, you could qualify for unsecured status and better terms. Or you can apply for a different card. And putting money into a savings account reinforces the point that credit isn't an entitlement.