Credit Cards

To establish credit individually for the first time, start small and work your way up. A local department store or gas station is a good first step. Even if you don't have other credit, you may be able to obtain a credit card with a small credit limit - perhaps only $150 or $200.

Since gasoline credit cards are not revolving (cannot carry a balance forward month-to-month), often they are easier to obtain than regular credit cards. Similarly, some department stores offer revolving credit for a specific purchase and this is sometimes easier to establish. It is also a great way to establish credit. 

Before you apply, ask if the credit grantor regularly reports your bill-paying history to a credit bureau. Since your intention is to build a positive credit history, avoid lenders who don't report your information to credit bureaus.

When you get the card or loan, use it. Consistently pay your bills on time. Your credit grantor will report this information to the credit bureau. In this way, you'll establish a history of responsible credit use.

After six months, apply for another card. Continue using your credit and paying your bills on time. Before you know it, you won't have to ask for credit - credit grantors will come to you.

If you're turned down for credit, ask the credit grantor for specific reasons. Perhaps your salary is not high enough or you haven't lived at your current address long enough. Time may resolve these matters. Reapply for credit when your situation changes.

Secured credit cards are also available. With a secured card, you deposit a specified amount of money in a financial institution which then issues you a bank credit card (Visa or Mastercard). The amount you deposit becomes your credit limit. With timely payments, your credit limit may increase and eventually the account may no longer need to be secured by your savings.

Be Responsible

Because credit cards make it easy to purchase things now and pay later, it's easy to lose track of how much you've spent. Make sure you pay all your bills on time, and only get the credit cards you need.

To establish and maintain good credit, pay at least the minimum amount due on each account every month, and pay on time. Allow five to seven business days for payments made by mail.

Use your credit card wisely, and you'll have a very beneficial financial tool. Use your card unwisely, and you'll run up credit card debt you can't afford. Nothing is easier than charging small things here and there, only to find yourself with a large bill you can't pay.