Here are five ways to help develop good financial habits and begin to build credit:

1. Establish banking relationships - open checking and savings accounts. This will not directly establish your credit history, but lenders typically ask for bank account numbers on credit applications. If the account remains in good standing, this can help the lender know that you can manage money.

2. Be consistent. When reviewing a credit or loan application, lenders look for a stable income source, work history, and place of residence.

3. Apply for a department store card or a gas card. These may be easier to obtain than regular credit cards and typically have lower credit limits. Be careful, however, as some of these cards come with high interest rates. It is a good strategy to charge only small items and pay your card balance off in full each month.

4. Apply for a secured credit card. To help build your credit history, a secured card works like any other credit card, but requires a collateral account. Your credit line will directly reflect the amount of your collateral deposit. Some companies will evaluate your history and consider graduating you to an unsecured card if you meet their specific criteria.

5. Consider a co-signer or co-applicant. Applying with a cosigner or co-applicant may help you qualify or acquire better credit terms, but remember that your cosigner or co-applicant also takes responsibility for payment. That means the credit history will be reflected on both of your credit reports.

 Tip 

If you’re a college student, look for a student credit card. It may be easier to qualify for and can help you build credit while you’re in school.
Once you’ve built your credit history, keep it moving in a positive direction. If you maintain your credit, manage your debt, and grow your savings, you will be better prepared to meet your financial goals.

Q:
Which of these is not a good way to establish your credit?

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