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How to Establish Credit

Once, credit cards were only for the select few. The rest of us used cash. When we were out of money, we had to make do until the next payday or we borrowed from a friend or family member. Today, qualifying for a credit card is easy. Establishing a good credit record, however, requires work and patience.

Are you just starting out with credit? Or are you trying to clean-up your credit record? Either way, you may hit a frustrating wall: You must have credit to create a credit history and your credit history must be good. Many financial companies don't want to give credit to someone without an established record or a good record, but don't give up. There are several good ways to work around both situations.

Get a secured credit card. You will get a credit line based on a cash deposit you make to your financial company. Deposits are usually low, and so will be your credit limit. But it's a start.

Get a store credit card. It's fairly easy to get a store credit card. Be sure they subscribe to a major credit reporting agency. If not, you won't be building a credit history.

Ask someone with a good credit record to co-sign with you. This requires a lot of trust from the other person. If you fail to pay, he or she must pay. That could wreck a relationship as well as a credit record.

If you have damaged credit, you'll need to fix what happened in the past as you're rebuilding your future. Pay old debts and fix errors as soon as you can.

Once you have a credit line, build a good credit history by using it wisely. Keep balances low. Always pay on time. Don't get unnecessary credit cards; stick with a few good cards.