From a short article I wrote based on advice I read here about
building good credit...
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Having little or no prior credit history, we first need to accomplish the task of possessing a credit card with which you can "prove" yourself. Dismiss the high interest, high fee credit card offers that have probably begun to arrive in the mail and contact the major financial institution you normally do banking with to arrange to get either a secured credit card or a cosigned credit card.
Secured credit cards are geared towards those with a nonexistent or damaged credit history. Having contacted your bank for a secured credit card, you would typically be asked to pledge $100 of your money right now in exchange for a card with a low limit (usually in the $500 - $1000 range).
Use your secured credit card frequently and pay off the balances diligently every month, avoiding the buildup of any interest. Barring that, pay at least the minimums and realize doing this is a tiny black mark against you this early on. Do not request an increase on your limit for at least one year.
After that solid first year has passed, apply for your first unsecured credit card. If you are approved, it's time to close your existing secured credit card - which gets you back your $100 plus interest earned. Then continue to use your unsecured credit card responsibly in the manner already described and good things (lower rates, higher limits, girls in tiny skirts) will start to come your way.
Having already detailed the steps to creating good credit, we've skipped over the difference between a secured credit card and a co-signed credit card.
A co-signed credit card is one in which your potential credit lender asks your parent, guardian or older sibling (basically anyone related to you who has an established credit history) to vouch for your responsibility and possibly even be held liable if a problem arises. It's just a different form of security for your lender. Follow the same steps to establishing your credit as illustrated regarding secured credit cards.
Some notes. Generally, credit inquiries fall off your record after 12 months. Space your credit applications out with this in mind. Also know that credit bureaus are typically 2 months behind the events of today; If you've had a string of late payments within that time period hold off to clear that backlog before taking any major action towards taking on new credit.
Cardweb.com keeps a list of
bank credit cards available on a secured basis in the United States. Try that site first in your search for an appropriate starter credit card.
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