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Dear Liz: I am 20 and trying to build my credit. I rented an apartment for a year, and I bought a car last year but needed a cosigner to get the loan. It seems like none of this is factoring into my credit score, because I can’t get a credit card! I applied for one through my credit union and was denied.

Is there any other credit card I can get besides a secured card needing a deposit? I want to refinance my car to get the cosigner’s name off it, but if I have zero credit I’m not sure I’ll be able to.

Answer: You’re right that your apartment rental probably isn’t being factored into your scores. Landlords typically don’t report rental payments to the credit bureaus. But your car loan should be helping build your credit as long as it’s being reported to the bureaus and you’re making every payment on time.

The fact is, building credit when you’re young is tough — and it’s about to get tougher for people under 21, because of new restrictions on credit card issuers that just went into effect.

The Credit Card Accountability, Responsibility and Disclosure Act requires issuers to make sure people under 21 have an independent source of income before giving them a card. If the applicants don’t, they’ll need an adult cosigner.

But credit card issuers were tightening their standards even before the CARD Act was passed last year. Even credit unions, which traditionally have been easier places to get credit, raised their standards for who could get a card.

So unless you can find someone to add you to an existing card as an authorized user, or who is willing to cosign an account to make you a joint account holder, a secured card is probably your best bet.

You’ll want a card that reports to all three credit bureaus and that has an annual fee under $75. You can find offers at CardRatings.com, CreditCards.com, LowCards.com and the Index Credit Cards site

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One alternative to secured cards are prepaid debit cards like the MiCash Prepaid Mastercard. They provide the convenience of a credit card without the finance charges. However, because they aren’t a form of credit, the only way to build credit using them is to take out small iAdvance loans on the card and pay them back. They are an alternative to a checking account with ATM card, for some students.


I’m not a big fan of prepaid cards because of their fees. As I understand it, the MiCash card has a $9.95 activation fee, a $4 monthly fee, a 50-cent-per-purchase fee, a $2 inactivity fee, a $1.75 ATM fee, a $1 for ATM balance inquiries and $1 fee for calling customer service. If the purpose is to teach students to cough up hard-earned money to banks, the card does a fine job of that, but it’s not a great alternative for building a credit history or learning how to manage money responsibly.