How to Build Credit When You Have None

If you have absolutely no credit or no credit history, you could find it pretty difficult to apply and be approved to receive a credit card. The most likely reason reason you don't have credit is because you've just turn 18. At the age of 18 you are legally allowed to be a new owner of that shiny credit card you've always dreamed of.

Wielding a credit card at such a young age can be dangerous. Young people are usually unaware of the dangers of credit card debt, and the ease of being able to purchase nearly anything you want, instantly, without cash makes that danger much more clear. However, establishing credit at a young age is easier than doing it later in your life. On top of this, credit will help you further down the road by allowing you to take out loans, create better opportunities for you in the job market, let you purchase/lease a car, as well as eventually allowing you to purchase your very own house. Ah, the power of the credit card is a wonderful thing.

How to Get Your First Credit Card

If you just aren't able to get a credit card, whether you haven't reached the age of 18 yet or the credit providers don't trust the fact that you have absolutely no credit history, there are several steps you can take in order to make yourself seem more dependable when it comes time to getting your first credit card.

First, you will want to create a savings and checking account at any bank. While having either of these accounts won't be helping you build your credit, they do make you look more liable for yourself in the eye of creditors. Having a savings and checking account are also beneficial, as you can build interest on top of the cash you deposit in your savings account and instantly purchase items with money in your checking account without the need for cash in your pocket.

Credit Cards with a Co-Signer

An option that will allow you to build instant credit is to get someone, most likely a parent, with excellent credit to co-sign on a minute personal loan with you. As soon as you start making payments back on the loan, and making payments on time, you will be redeemed with credit from your co-signer.

This is one of the quickest ways to build credit as it's like a very credit-worthy person is vouching for you. If you are able to apply for a small personal loan, yourself, and can pay installments back monthly, you'll also find yourself on track to building good credit.

Applying for a Store Credit Card

Another route you can take is to apply for a store card. These cards are like credit cards, but they can only be used at that specific store. Some cards can actually be used anywhere, but you would have to read the conditions before you apply to make sure. While it isn't the fastest way to build credit, it does give you some, and if you have just turned 18 you probably don't have any. Prepaid credit cards are a similar choice, building small amounts of credit on pre-charged cards.

Student Credit Cards

One of the easiest credit cards to get at young ages, even with no credit history at all, are student credit cards. These types of cards are found all over big college campuses, usually set up at booths where students can sign a form and be "instantly approved." While it is a good choice for those with no credit, these types of credit cards are dangerous.

Student credit cards have low credit limits that are easy to break with extremely high interest rates and penalties for those that don't make payments. Student credit cards rely on the fact that mom and dad will take care of any of their children's credit problems. Don't put your parents in a difficult situation if they do not have established credit or are in bad financial shape.

Start Building Credit!

Once you've got enough credit built up that enables you to get a proper credit card, start using it! Stay away from the credit limit and pay off all the money charged to it before the payment deadline is due each month in order to keep building your credit and avoid credit debt.