How to Help Establish Credit

A good credit history will make it easier to qualify for good mortgage rates and to borrow money in the future. A credit score is based on payment history, the amount you currently have borrowed, and the amount of your available credit you are currently using. When you first begin to establish credit it may be difficult to find a bank willing to lend to you. There are ways to establish credit even if you cannot get a traditional loan.

Instructions

1

Apply for financing through a store. This type of financing is usually easier to acquire, since the store can take back the item if you default on payments. Look for an offer with zero percent financing and then figure out how much you need to pay each month to pay off the entire amount before the offer expires. Make the payments on time each month.

2

Acquire a guaranteed credit card. Banks who offer this card require you to deposit money into a savings account, usually a certificate of deposit, to act as collateral for the credit card. If you take the money out of the bank, generally the remaining balance left on the card is due immediately. However, you may use the credit card in the same way you use a traditional credit card and make monthly payments and pay interest on the money.

3

Use a credit card offer you receive through the mail or apply online. Generally the terms on your first credit card are not as favorable, since you do not have an established credit history. The card may have a higher interest rate. Make the payments on time each month and try to pay off the balance in full each month.

4

Get a cosigner on a loan to help you establish credit. You may include a cosigner with almost any type of loan available to you, but many people do this with car loans. The cosigner will become responsible if you were to default on the loan, and it can negatively affect his credit as well.