How to Establish Credit

A positive credit history is an asset, not only when you apply for a credit card, but also when you apply for a job or insurance, or when you want to finance a car or a home. Here are three major ways to start establishing a credit record for yourself:

• Consider applying for a credit card issued by a local store and use it responsibly. Ask if they report to a credit bureau. If they do, and if you pay your bills on time, you'll establish a good credit history.

• Consider a secured credit card. To obtain a secured credit card, you open and maintain a bank account or other asset account at a financial institution as security for your line of credit. Your credit line will be a percentage of your deposit, typically from 50 to 100 percent. Application and processing fees are not uncommon for secured credit cards. In addition, secured credit cards usually carry higher interest rates than traditional non-secured cards.
  
  
• Consider asking someone with an established credit history - perhaps a relative - to co-sign the credit card account if you do not qualify for credit on your own. The co-signer promises (guarantees) to pay your debts if you do not. You will want to repay any debt promptly so you can build a positive credit history and apply for a credit card in the future on your own.

If you are turned down for a credit card, ask why. It may be that you have not been at your current address or job long enough, or your income may not meet the issuer's criteria. Different credit card companies have different standards. However, if several companies turn you down, it may indicate that you are not ready for a credit card.