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College Students and Recent Grads, Reviews

Discover Student Loans: In-Depth Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Have you exhausted all your options with federal student aid, and still need extra help covering the costs of college? Applying for a private student loan may be your next step.

Keep in mind private student loans don’t offer many of the benefits federal student loans do. Interest rates are often higher, and repayment assistance isn’t always available. That’s why it’s recommended you fill out a FAFSA and submit it first – you’ll want to claim any grants and scholarships available to you before turning to private student loans, as grants and scholarships don’t have to be paid back.

Discover is one of many private lenders that offers undergraduate student loans, so if you need more money to cover tuition, here’s what you need to know about Discover’s offers.

What does Discover offer undergraduates?

Undergraduate Student Loan

Fixed APR range

5.99%-12.99%

Variable APR range

3.99%-11.74%

Loan terms offered

15 years after deferment period

Fees

None

Loan amount

A minimum of $1,000 up to the entire school-certified cost of attendance after financial aid. Aggregate loan limits apply.

Repayment plans

  1. You can pay a fixed monthly payment of $25 while in school or during grace period

  2. You can defer payments until 6 months after graduation, or when you’re enrolled less than half-time

  3. And you can also make additional payments while in school to reduce your costs by the time your regular monthly payments come due.

Discover also offers some repayment options for borrowers experiencing financial difficulties. It recommends borrowers call the Repayment Assistance Department at 1-800-STUDENT to talk about options such as deferment, early repayment assistance program, payment extension, reduced payment, forbearance or hardship.

Cosigner release

None for loans originated by Discover. Cosigner release for previous CitiAssist Loan purchased by Discover is available. You must be at least 18, a U.S. citizen or permanent resident, and meet the repayment, credit history and income requirements.

Savings opportunities

  1. Reduce your rate by 0.25% if you opt into automatic payments during repayment period.

  2. Get a one-time cash reward of 1% of your student loan amount (for loan applications submitted on or after May 1, 2014) if you maintain a 3.0 GPA or equivalent.

As of April 10, 2018

Discover’s undergraduate student loan claims to be a “zero fee loan” as there are no application, origination or late fees associated with it. On top of that, you can apply to cover 100 percent of your cost of attendance (the minimum loan amount is $1,000).

Discover lists out its eligibility requirements on its website:

  • You need to be enrolled at least half time in a bachelor’s or associate degree program, be working toward a degree and make satisfactory academic progress, as your school defines it.
  • You can be a U.S. citizen, permanent resident, or international student, though international students need a cosigner who is a U.S. citizen or permanent resident.
  • You must be at least 16 years old to apply.
  • You need to pass a credit check.

If you don’t have an extensive credit history, Discover encourages you to apply with an eligible cosigner. This may increase your chances of being approved for a loan with more favorable terms and rates. Be aware there’s no cosigner release with a Discover student loan – the cosigner is on the loan for the entire duration.

What can Discover offer to graduate students?

Discover offers loans for various graduate programs with zero fees (meaning no origination, application or late fees). The company offers loans with a $1,000 minimum and a 20-year repayment period. Like the undergraduate loans, you may also be eligible for savings opportunities, as well as the ability to add a cosigner onto your loan.

All graduate and professional school loans have similar repayment plan options:

  1. You can either make a $25 monthly payment while in school and throughout grace period, or
  2. You can defer your payments until nine months after graduation or when you’re enrolled as a half-time student (or less).

After that, you’ll be required to make monthly payments as dictated by your loan term, amount and interest rate.

You can also make additional payments while in school to bring down your loan balance before you start making regular monthly payments. On its website, Discover says it offers help to borrowers experiencing financial difficulty. You can call the Repayment Assistance Department at 1-800-STUDENT to learn more about options such as deferment, early repayment assistance program, payment extension, reduced payment, forbearance and hardship.

All Discover student loans have the same policy on cosigner releases: There is no cosigner release option for loans originated by Discover, but cosigner release for previous CitiAssist Loans purchased by Discover is available. You may be eligible if you are at least 18, a U.S. citizen or permanent resident, and meet the repayment, credit history and income requirements.

Here are the different graduate and professional school loans available from Discover, as of Dec. 4, 2017:

Graduate loans

Discover’s graduate student loans are for those who are enrolled in a qualifying graduate program (master’s or doctorate) at least half-time and are pursuing a degree in an eligible school. You’ll need your school to prove that you’re making satisfactory academic progress. U.S. citizens, permanent residents or international students need to be a minimum of 16 years of age when applying and meet the requirements during a credit check. You can choose to apply by yourself or with a cosigner, unless you’re an international student. In that case, you’ll need a cosigner who is either a U.S. citizen or permanent resident.

Once approved, the funds will be disbursed through the school. If you can maintain a 3.0 GPA or equivalent, you’re eligible for a one-time cash reward of 1% of your loan amount. You’ll need to redeem your cash within 6 months after the academic term for your loan is finished.

Graduate Loans

Fixed APR range

5.99%-13.99%

Variable APR range

3.99%-12.99%

Loan terms offered

20 years after deferment period

Fees

$0

Loan amount

From $1,000 up to 100% of school-certified costs after financial aid. Aggregate loan limits as set by Discover applies and varies depend on the program.

Savings opportunities

Opting into automatic payments gets your rate reduced by 0.25%.

If you maintain a 3.0 GPA (or equivalent), get a 1% one-time cash reward of your loan amount.

MBA loans

MBA loans are for students who are pursuing a degree at a qualifying business school, either for an MBA or a related graduate program. It’s the same requirements to qualify for this loan as Discover’s graduate student loan offering, and the loan amount will be disbursed through your school. You’re eligible for the one-time cash reward of you maintain a 3.0 GPA or equivalent. Check Discover’s Rewards for Good Rates page to find out your GPA eligibility.

MBA Loans

Fixed APR range

6.49%-11.99%

Variable APR range

4.99%-11.74%

Loan terms offered

20 years after deferment period

Fees

$0

Loan amount

From $1,000 up to 100% of school-certified costs after financial aid. Aggregate loan limits as set by Discover applies.

Savings opportunities

Opting into automatic payments can get your rate reduced by 0.25%.

If you maintain a 3.0 GPA (or equivalent), get a 1% one-time cash reward of your loan amount.

Health profession loans

This type of loan is for those who are pursuing programs in allopathy, dentistry, nursing, occupational therapy, optometry, osteopathy, pharmacy, physical therapy, physician assistant, podiatry and veterinary medicine. You’ll need to be pursuing a degree in an eligible school that offers these programs.

To qualify for the health profession loan, you’ll need to meet the same requirements as the MBA or graduate loans. You may also qualify for the one-time 1% cash reward if you can maintain a 3.0 GPA or equivalent. Once approved, the funds will be distributed through to your school.

Health Profession Loans

Fixed APR range

6.49%-9.99%

Variable APR range

4.99%-9.24%

Loan terms offered

20 years after deferment period

Fees

$0

Loan amount

From $1,000 up to 100% of school-certified costs after financial aid. Aggregate loan limits as set by Discover applies.

Savings opportunities

Opting into automatic payments can get your rate reduced by 0.25%.

If you maintain a 3.0 GPA (or equivalent), get a 1% one-time cash reward of your loan amount.

Law school loans

The law school loan is for graduate students who are currently enrolled in a qualifying law school. You’ll need to show that you’re doing well in school at be at least 16 years or older to qualify for a loan. Getting approved for a loan is the same process as the above loan types. As well, loan amounts are given to your school.

Law School Loans

Fixed APR range

6.49%-9.99%

Variable APR range

4.99%-9.24%

Loan terms offered

20 years after deferment period

Fees

$0

Loan amount

From $1,000 up to 100% of school-certified costs after financial aid. Aggregate loan limits as set by Discover applies.

Savings opportunities

Opting into automatic payments can get your rate reduced by 0.25%.

If you maintain a 3.0 GPA (or equivalent), get a 1% one-time cash reward of your loan amount.

Residency loans

Discover’s residency loans are meant to help residency candidates in medical school cover the cost of internship, residence, board exam reviews and relocation. To qualify, you’ll need to be enrolled at least half-time in a qualifying health-profession graduate program and making satisfactory progress. You may also qualify if you have recently graduated from medical school within the last 12 months. You need to pass a credit check and be a U.S. citizen or permanent resident. International students may apply but they’ll need a U.S. citizen or permanent resident cosigner.

Once your loan is approved, the money will be given to you via electronic deposit or a check. Unlike the other graduate loan programs, there is no 1% cash back reward but you can get an interest rate deduction if you enroll in auto pay.

Residency Loans

Fixed APR range

6.99%-9.49%

Variable APR range

5.74%-8.74%

Loan terms offered

20 years after deferment period

Fees

$0

Loan amount

$1,000-$18,000 for the allopathy, dentistry, optometry, osteopathy, pharmacy, podiatry and veterinary medicine fields

$1,000-$5,000 for the nursing, occupational therapy, physical therapy and physician assistant fields. Aggregate loan limits as set by Discover applies.

Savings opportunities

Opting into automatic payments may reduce your rate by 0.25%.

Bar exam loans

The bar exam loan is for students who are considered candidates for the bar exam. It’s meant to help you cover the cost of living expenses and bar exam prep class while you’re studying for the exam. To qualify, you’ll need to have graduated from law school in the last 6 months or be enrolled at least half-time in your final year in a law degree graduate program. In addition, you’ll need to be a U.S. citizen or permanent resident (international students will require a cosigner) and meet satisfactory credit requirements.

The funds for the loan will be given you via electronic transfer to your bank or a check. You can get a 0.25% rate reduction if you participate in auto pay.

Bar Exam Loans

Fixed APR range

6.99%-11.49%

Variable APR range

5.74%-10.74%

Loan terms offered

20 years after deferment period

Fees

$0

Loan amount

$1,000-$16,000. Aggregate loan limits as set by Discover applies.

Savings opportunities

Opting in automatic payments get your rate reduced by 0.25%

How do Discover student loans compare?

Discover student loans are fairly competitive when compared to other top student loan companies. Their rates and repayments are comparable to other large financial institutions. However, Discover falls short when compared to cosigner releases, rates compared to credit unions and loan amounts.

Where Discover stands out:

  • No fees: There are no application, origination, or late fees, whereas some other big banks do.
  • Unique rewards program: Get rewarded for good grades by getting a one-time 1% cash reward for qualifying loans. Other places only offer auto-pay discounts.
  • Competitive rates: Discover’s fixed rates are in par or lower to its competitors.

Where Discover student loans fall short:

  • No cosigner release option: Only a certain type of loan purchased by Discover is eligible for cosigner release. Otherwise, you cannot release your cosigner from a Discover student loan (unless you refinance). Other banks and credit unions offer cosigner release if the borrower has met certain requirements such as a satisfactory credit history and on-time payments.
  • High variable rates: Discover’s variable rates are considerably higher compared to other financial institutions.
  • Longer terms: Competitors offer shorter terms whereas Discover’s are anywhere from 15 to 20 after the grace period has ended.

The application process

Discover says its application takes about 15 minutes to fill out online. Before applying, have the following information ready to enter:

  • Your school’s information
  • Your field of study and the academic term for which you’re applying
  • Social Security number
  • Loan amount requested
  • Amount of financial aid you’ve already received
  • If applicable, financial information such as salary and rent/mortgage payments
  • Your address (permanent and where you’ll reside once at school)

Discover makes the application process simple. You can select the state your school is in, and a list of schools in that state will populate. Choose your school from the list or search for it.
You’ll then be asked to enter all your personal information and any other details Discover needs.

If any additional documentation is requested, you can upload it online. By submitting your application, a hard inquiry of your credit will be conducted. The same is true if a cosigner applies with you.

Funds will be disbursed according to your school’s financial aid office deadlines.

Repayment assistance options

Discover has multiple options for you in case you experience financial hardship while paying back your loans. Federal student loans come with certain benefits such as deferment and forbearance, so you don’t need to make monthly payments during a period of financial difficulty. Private lenders aren’t required to offer these benefits, but some lenders do. Keep in mind they’re not guaranteed and can be taken away in the future.

While it may seem like paying your student loans off is years away, it helps to know what your options are as they vary among private lenders. You should take this into consideration when shopping around for private student loans.

Discover offers a range of solutions like deferment, payment extension, forbearance and reduced payments. Take a look at what each entails and what it takes to qualify here.

Refinancing student loans with Discover

Discover offers loan consolidation to help you lower your interest rate and simplify your loan payments. If you cannot get a cosigner release, refinancing your student loan allows you to do so by paying off your existing loans. You can choose to consolidate some or all of them with a minimum of $5,000 up to $150,000 upon credit approval.

Like their student loan options, there are no application, origination or early payment fees. If you are able to make additional payments, you can pay off your loan sooner and save on the cost of your loan. You can consolidate while enrolled in school, during your grace period or after it expires. Once you qualify, your first payment is due anywhere from 30-45 days after the loan is disbursed.

However, Discover’s student consolidation rates are higher compared to its competitors, even with the auto pay discount. Also, the repayment period is anywhere from 10 to 20 years depending on your creditworthiness, which is longer than other places that offers terms as short as 5 years. If you have a cosigner for your refinance loan, you cannot release them, unlike some other banks.

To qualify, you’ll need to be a U.S. citizen or permanent resident, be the primary borrower for loans you’re planning on consolidating, have a good repayment history and prove you have sufficient income to handle your payments. Discover also requires its borrowers to have no more than $150,000 in aggregate student loan debt, including federal student loans, though depending on your field of study you may be eligible for higher limits.

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on Discover Bank’s secure website

Who benefits the most from a Discover student loan?

Overall, students who have applied for federal aid and have received the maximum amount they’re qualified for, but still need additional assistance to fund their college tuition, may benefit from Discover’s student loan. Its rates are somewhat comparable to federal loans as long as you or a cosigner have excellent credit, and it offers great repayment assistance options along with a few bonuses that don’t come with federal loans.

Consider all options

While Discover has a decent student loan program to offer borrowers, it’s far from the only option out there. You may be able to get better rates and terms with another private lender. It’s a good idea to shop around to see the different loans you’re eligible for. Some credit scoring models will count multiple applications for student loans as a single inquiry, as long as they’re made within a short period of time (generally between 14 and 45 days, depending on the score). By shopping around, you’ll be able to choose the best loan offer and may not see much impact on your credit score.

Also, remember to compare APRs and not just interest rates – other lenders may charge late, origination and application fees that need to be factored into the cost of the loan. Check to see what repayment options are available, and any other “bonuses” lenders may be offering.

The fine print

There really isn’t any. There are no prepayment penalties, and no origination, late or application fees associated with the loan. Still, make sure you take the time to read your loan agreement before signing it.

A word of warning on choosing a variable interest rate, though – while variable rates are lower and look more attractive, keep in mind the rate may change at any time. That means your loan may become more expensive.

No one can predict where the market will go, so rates may stay low, or they may skyrocket in the future. A fixed interest rate can provide valuable peace of mind, even if you have to pay for it.

Erin Millard contributed to this story.
This post has been updated. It was originally published Sept. 1, 2015.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sarah Li Cain
Sarah Li Cain |

Sarah Li Cain is a writer at MagnifyMoney. You can email Sarah Li here

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College Students and Recent Grads

College Ave Private Student Loans Review: Accessible Eligibility Criteria, Flexible Repayment

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’re concerned about eligibility for a private student loan, consider that College Ave Student Loans stands out for its accessibility.

You could be an international student without a GED seeking an associate degree on a part-time basis, for example, and still qualify for College Ave private student loans.

Founded by former Sallie Mae executives in 2014, the online-only company offers competitive interest rates to students in college as well as career or graduate schools, as well as their creditworthy parents.

To ensure it’s the right lender for you, consider our review.

College Ave Student Loans review: The basics

While you could qualify for College Ave private student loans with several different educational backgrounds and ambitions, you still need to be creditworthy. Having a credit score of at least 660 is a good start.

The lender doesn’t disclose its specific credit criteria, but you could gauge your (or your cosigner’s) eligibility using the lender’s pre-qualification tool. Passing that test would unlock these loan features:

  • Loans for part- or full-time undergraduates, graduate students, career school students and parents
  • Prequalify with a three-minute application (and without affecting your credit)
  • No fees to apply
  • Fixed and variable interest rates

  • Borrow between $1,000 and your school’s full cost of attendance
  • Choose from four in-school repayment options, including full deferment
  • Select one of four repayment term options: five, eight, 10 or 15 years
  • Receive your loan in as little as 10 days after applying
  • Cosigners are accepted — and encouraged (note that they are required for international students who have a Social Security number)
  • Release your cosigner after more than half your repayment term has elapsed
  • Enjoy a federal loan-like six-month grace period after leaving school
  • Net a 0.25% interest rate reduction for enrolling in autopay
  • No penalty for paying off your loan early
  • Forbearance — the ability to temporarily suspend payments — is awarded on a case-by-case basis
  • Student loan forgiveness in the case of the borrower’s permanent disability or death

While the majority of the loan characteristics above are true no matter your status in school, there are some notable differences for graduate students, career school students and parents.

Graduate students

Whether you’re seeking a postgraduate, master’s, doctoral or professional degree, you can count College Ave private student loans as an option. Note that the ceiling on College Ave’s interest rate ranges as of early June 2019 was significantly lower for graduate students compared to undergrads.

In summer 2019, College Ave also added unique perks for postgraduate students seeking an MBA or other professional degree. The loans include longer grace periods, for example, with 12 months for dental students and 36 months for medical students.

There are also deferments available for students who enter a residency program — or, in the case of law school students, a clerkship — after receiving their degree. Additionally, students seeking these advanced credentials might be able to select a longer loan term (20 years) than their peers.

Career school students

If you’re pursuing an associate, bachelor’s or graduate degree in a career-focused program, including at some community colleges, keep this bonus in mind: College Ave offers borrowers of this loan type a $150 statement credit for completing their program.

Parents

College Ave gives parents even more repayment term flexibility. The lender said on its website that it would assist creditworthy parents in choosing one of 11 possible repayment terms, spanning between five and 15 years.

Another plus of borrowing from College Ave: The lender allows Mom or Dad to directly receive up to $2,500 of the loan funds to cover smaller, secondary expenses including books and supplies. (The balance would be sent directly to the student’s school.)

On the downside, however, the floor on College Ave’s interest rate ranges as of early June 2019 was noticeably higher for parents than for undergraduate students. Plus, parent borrowers only have three in-school repayment choices, not including full deferment. Making interest-only payments is the cheapest option available.

What we like about College Ave Student Loans

It’s rare to find a lender that’s so accessible. In College Ave’s eyes, you don’t need a high school diploma or GED, don’t need to be pursuing a four-year degree, don’t need to be enrolled full time — you don’t even need to be an American student (as long as you have a Social Security number).

Aside from flexibility on qualifying, below are a few more features of College Ave private student loans that benefit from additional context.

A bevy of in-school repayment options

Many private lenders offer fewer repayment options than College Ave. But College Ave provides four payment methods, including:

  • Deferred: Postpone payments until six months after leaving school, allowing interest to pile up on your balance.
  • Flat: Submit monthly dues of $25 to eat into the accruing interest on your loan.
  • Interest-only: Pay only enough each month to cover accruing interest to ensure you face the same balance you borrowed upon leaving school.
  • Full: Enter repayment immediately by making interest-and-principal payments, so you’ll owe less than what you borrowed once you step off campus.

For cash-strapped students, making (significant) in-school payments isn’t always possible. For other students with income or parental support, entering repayment sooner could pave the way for a faster route out of debt. That’s why it’s so nice to have options.

According to the lender, about 6 in 10 College Ave borrowers elect to submit in-school payments to whittle down interest before the reality of repayment hits upon graduation.

Pick your repayment term

Some lenders, including Sallie Mae, assign you a loan repayment term based on your creditworthiness.

One benefit of borrowing College Ave private student loans, however, is that you (and your cosigner) could independently choose your term. You might select five, eight, 10 or 15 years, depending on your budget and future income. (Unlike with federal loans, however, private lenders like College Ave don’t allow you to change terms later, extending or shortening your repayment term as you wish.)
College Ave said on its website that 84% of borrowers choose a term of 10 years or less.

Receive strong customer service

Nearly 400 College Ave borrowers had awarded a 4.8-out-of-5 rating of their lender — at least according to the lender website.

For a more objective accounting, Trustpilot lists a four-star rating for College Ave, and the Better Business Bureau gives the lender an “A+” grade.

What to keep in mind about College Ave Student Loans

If you like what you’ve learned about College Ave private student loans, keep in mind that no lender is perfect for every borrower.

Decide for yourself whether the following facts should point you in the direction of a competitor.

A long trek to cosigner release

By College Ave’s math, 96% of undergraduates have a cosigner on their loan. After all, teens and 20-somethings can make up for their thin credit files by piggybacking on a creditworthy cosigner, usually Mom or Dad.

The majority of top-rated lenders allow you to release that cosigner (from their legal obligation to repay your debt, if you can’t) after 12 to 48 months of successful payment history.

With College Ave private student loans, however, it’s a long haul. To remove your cosigner from your loan agreement, you must:

  • Reach the halfway mark of your loan term
  • Make 24 consecutive on-time payments
  • Show twice as much income as your loan balance
  • Pass a credit check

If you want to reward your cosigner by sending them on their way, you might avoid a 15-year loan term. Under that scenario, you wouldn’t be able to release them until you’ve been in repayment for seven-and-a-half years.

To make matters worse for some borrowers, international students can’t achieve cosigner release at all.

If cosigner release essential to you and your guarantor, you might consider borrowing from Sallie Mae, which offers a 12-month route to release.

A limited form of forbearance

Forbearance is a vital component of any student loan, as it allows you to press pause on your repayment in the face of hardships such as unemployment.

Unfortunately, College Ave is cagey about its forbearance policy, leaving details off its otherwise resource-heavy website.

It turns out, the lender evaluates forbearance applications on a case-by-case basis. In other words, if you find yourself out of work or under another sort of financial duress during repayment, there’s no guarantee College Ave will grant you a reprieve.

If you think you might need a more clear-cut safeguard built into your loan, you might opt to borrow from Discover, as the bank offers a variety of protections, from payment extensions to as many as 12 months of forbearance.

Third-party loan servicing

If you’re attracted to College Ave, in part, because of its modern, easy-to-use platform and strong customer service record, you might be disappointed to learn that the company outsources the servicing of its loans.

Repayment of College Ave private student loans even takes place on a different website. University Accounting Service (UAS) handles statements and payments and fields customer concerns.

When deciding whether College Ave is right for you, factor UAS into the equation, too. You might be wise to contact the latter company to get a sneak peek of its effectiveness in answering your loan management questions.

If you’re left wanting more, you might be better off walking into your local bank or credit union, where your loan will be funded and managed under the same roof.

Are College Ave Student Loans right for you?

If you’re an atypical college student — maybe you’re attending part time or seeking an associate degree — College Ave private student loans are more accessible than education financing found elsewhere.

Even if you’re attending a traditional four-year school, you could be drawn to the online lender’s assortment of in-school and postgraduate repayment options. They give you the power to customize a loan that works best for your borrowing situation. Plus, if you (or your cosigner) are especially creditworthy, you could unlock some of the lowest interest rates offered by banks, credit unions and online competitors.

College Ave won’t be as appealing, however, if you’re counting on a fast pathway to cosigner release or federal loan-like safeguards such as mandatory forbearance. To pit College Ave against the competition, find out where the lender ranked among our top-rated student loan companies.

MagnifyMoney has independently collected the above information related to this review, which is current as of June 3, 2019, unless otherwise noted. College Ave. neither provided or reviewed the information shared in this article.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Andrew Pentis
Andrew Pentis |

Andrew Pentis is a writer at MagnifyMoney. You can email Andrew here

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Building Credit, College Students and Recent Grads, Credit Cards, Earning Cashback

How You Can Have a Good FICO Score Just One Year After Opening a Credit Card

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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When I moved to the U.S. from my hometown of Hangzhou, in China, to pursue my undergraduate degree, the thought of establishing a credit history wasn’t even on my radar. I was, after all, an international student from China, where day-to-day credit card use had only recently caught on.

It wasn’t until I returned to the U.S. a few years later to pursue my master’s degree in Chicago that I realized I’d need to establish credit if I planned to launch my career in the States.

Just one year after I opened the card, I already had a solid FICO score – 720, to be exact. This score landed me safely in the “good” credit range, meaning I probably would not have trouble getting approved for new credit. I still had work to do if I wanted to get into the “very good” credit category, which starts at 740. But as a credit card newbie, I was not disappointed in my progress. 

Here’s how I did it.

I selected the right card for my needs

I wish I could say I diligently researched credit cards to choose the best offer and best terms, but honestly, I just got lucky.

Shortly before graduate school started, I visited friends in Iowa. When we were about to split the bill after dinner at a Japanese restaurant, I noticed that all my friends had a Discover card with a shimmering pink or blue cover. The Discover it® Student Cash Back was known for its high approval rate for student applicants, and had been popular among international students.

I thought, “Oh, maybe I should get this one, too.”

One of the friends sent me a referral link that very night. I applied and got approved quickly. We both received a $50 cash-back bonus after I made my first purchase — an iPhone — using the card through Discover’s special rewards program. I even received 5% cash back from the purchase.

Besides imposing no annual fee, the card had other perks, such as rewarding me with a $20 statement credit when I reported a good GPA (up to five consecutive years), letting me earn 5% cash back on purchases in rotating categories and matching the cashback bonus I earned over the first 12 months with my account. For me, it was a great starter card, but there are plenty of other options out there.

Check out our guide on the best credit cards for students.

I also could have explored other options of establishing credit, like opening a secured card, for example, which would have been a smart option if I hadn’t been able to qualify for the Discover it student card.

I never missed a payment

Despite my very limited financial literacy at the time, I attribute my strong credit score to the old, deeply ingrained Chinese mentality about saving and not owing.

I never missed payments, and I always paid off my balance in full each month, instead of just making the minimum payment. I didn’t want to pay a penny of interest.

Credit cards carry high interest rates across the board, but student credit cards generally have some of the highest APRs. This is because lenders see students like me — consumers without much credit history — to be risky borrowers, and they charge a higher interest rate to offset that risk.

Best Student Credit Cards June 2019

It wasn’t until much later that I learned payment history is critical to good credit. In fact, it is the biggest factor there is, accounting for 35% of my FICO score.

A Guide to Getting Your Free Credit Score

I was careful not to use too much of my available credit

My friends with more experience advised me to use as little of my available credit as possible. They warned me that overuse had hurt their credit scores in the past. This didn’t much sense to me, but I followed their advice, for the most part diligently.

I later learned this is almost as important as paying bills on time each month. Your utilization rate is another major factor in your FICO score. Credit experts urge cardholders to keep their credit utilization ratio below 30%. The lower, the better.

That means if you have three credit cards with a total available limit of $10,000, you should try to never carry a total balance exceeding $3,000, and you really should aim for much lower than that.

A Guide to Build and Maintain Healthy Credit

I beefed up my score with on-time rent payments

Keeping in mind the importance of not maxing out my credit card, I never considered paying my rent with the card. In fact, some landlords charge credit card fees for tenants who try to pay with plastic.

But I did find a way to establish credit by paying rent using my checking account.

I paid rent to my Chicago landlord through RentPayment, an online service. RentPayment gave me the option of having my payments reported to TransUnion, one of the three major credit-reporting agencies (the other two are Experian and Equifax). Because I knew I’d always pay bills on time, I signed up for the program.

This likely helped me improve my credit mix, another key factor influencing a credit score. The more types of accounts you show on your report, the better your score can be — if you make all your payments on time.

Yes, I made mistakes. This was my biggest one

My first foray into the world of credit wasn’t completely blip-free.

The only thing that hurt my credit, besides my short credit history, was that I had tried signing up for a Chase credit card, along with other ways to finance my iPhone, just a few days before I applied for my Discover card.

None of the other banks approved my applications, and my score went down at the very beginning, due to the number of “hard inquiries” against my credit report. Hard inquiries occur when lenders check your credit report before they make decisions regarding your application. Having too many inquiries in a short period of time can result in a ding to your credit score.

I’ve learned my lesson, though, and I’ll be cautious in the future when it comes to applying for a lot of credit in a short time period. Overall, it should be noted that you should not be afraid to apply for new credit — even when hard inquiries do hurt your score in the short term, it typically isn’t disastrous, and your score should recover fairly quickly as long as you are a responsible user of credit. Having more available credit can also help your utilization rate — as long as you don’t increase your charges, of course.

You can also check to see if you have prequalifed for any credit cards without triggering a hard inquiry.

If you’re new to the world of credit cards, consider taking the steps I outlined above, and you, too, may have a healthy credit score before you know it.

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Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at [email protected]

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