How do I establish credit?

These five tips can help when building your credit history.

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. Pay your utilities. If your utilities, such as heat, electricity, telephone, cable, and water service, are in your name, you can help establish a good credit record by paying your full balance on time.

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

4. 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.

5. 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. 

 Tip 

Gas cards and department store cards are typically easier to obtain than regular credit cards.
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.