Credit Score 101: How to Build Your Credit
Apply for a Secured Credit Card
Secured credit cards available for those with limited credit. To get a secured credit card, you must make a deposit that is held by the issuer and usually matches the amount of your credit limit. Think about is like this – you deposit $500 with a bank and the bank give you a credit limit of $500 to use. This might seem like a game, but really, it is a great way to practice using credit and paying timely. More importantly, your timely payments will be reported to the credit reporting agencies and help you establish a credit history.
Get a Co-Signer
This option might not be available to everyone, but having a co-signer sign on your loan will typically allow you to borrow even without previously established credit. Two caveats: first, your co-signer needs to have good enough credit to quality for the loan, and second, the co-signer needs to understand that they are liable for the full amount of your loan or the amount you borrow.
Become an Authorized User
Similar to a co-signer, you are benefiting from the established credit of another individual. Again, here you need to establish an understanding – you can benefit from the other person’s credit, or you could potentially be hurt if they fail to pay timely.
Open a Store Credit
Many stores have credit available for the purchase of certain items. Don’t confuse this with the very expensive rent to own options in many stores. Instead, look for a store credit card or installment loan for a small ticket item for your first purchase.
Any way you begin to establish your credit, remember – making timely payments as agreed is the key. Get off on a good credit foot, and you will be setting yourself up for many more options in the future.