Your future self will thank you for building credit now.

As I previously stated in my entry about how your credit score is calculated, I mentioned that 10% of your credit score comes from the length of your credit history.  The following are ways you can start to build credit:

 

1.     Open up a secured credit card

 Basically with a secured credit card, you will have to give the bank a deposit that is equal to your limit.  So if you get a secured credit card with a $500 limit, the bank will require you to give them in a check for $500, sort of like paying a security deposit on an apartment.  A secured credit card’s purpose is pretty much solely for building credit.

 

2.     Beg your parents to be a cosigner on a credit card

In this case, your cosigner (aka your parents) will act as your security deposit.  This might give you a little more motivation to be financially responsible because if you don’t make your payments on time or max out the card, your parents credit will suffer (aka you will suffer)

 

3.     Apply for a Discover credit card

Discover tends to be more lenient about approving people with little to no credit history.  The limit might be low (like $1,000), but you have to start somewhere.  If you are responsible with that card, Discover will most likely increase your limit after three months of the account being opened.

 

4.     Become an authorized user on someone else’s (aka your parent’s) credit card 

You will be able to use the credit card, and (in most cases) you will be able to build credit by doing so.  Before setting this up, make sure that the issuer of the card gives you credit for the use of the card; otherwise, this will be pointless.