How To Establish Credit

The single most important factors in establishing credit are length of time that the account has been open and the timely payment on the account, no 30, 60, 90 day lates or collection accounts. Do not change or close credit accounts or change credit providers too frequently, this will not help your credit score.

The easiest way to establish credit is with credit cards. Department stores will usually extend credit to anyone with a steady income. Even though it is usually a small credit line, this is enough to start establishing credit. Gas credit cards are another option.

A secured card is also an option. You pay up front the amount of the card, so this is a "no risk" situation for the lender. You'll still be building credit by purchasing items and paying the balance off.

There are also special credit card companies which will help you establish credit. Watch out for yearly fees, fees for going over your credit limit and excess late fees.

Auto loans are easier to get than a home mortgage, but with any large amount of debt, if you do not have an established credit history you may pay a higher interest rate. Make sure the finance company reports monthly to the credit bureau. Some smaller finance companies do not. If you are trying to establish credit this could be important.