The Best Ways to Establish and Build Credit

Those who have never had credit extended will not have a credit score. This might not seem like a problem for those who have tens or hundreds of thousands saved up, but it can be a problem for anyone who wants to take out a loan. Those with no or poor credit will be stuck paying more in interest when they take out loans. Here are some options that can allow people to start building credit.
Get A Secured Credit Card

This type of credit card has a credit limit that’s secured with a deposit, which can be as low as $500. Other than this fact, cardholders use the card much as they would any other credit card. They make purchases with the card and then pay the card off each month. Keeping this up for a while can help them get to a better credit score and allow them to qualify for an unsecured card.
Become an Authorized User

Those who have a parent, spouse or sibling who have a solid credit score could benefit from this fact as long as the issuer reports authorized users to the credit bureaus. Most banks will allow cardholders to add authorized users to their accounts, regardless of their credit history. The card does not actually get mailed to the authorized user, but should the actual cardholder keep up a solid payment record, it will allow the authorized user to build credit.
Get a Credit Builder Loan

These are loans in which the bank actually leaves the money in a bank account while you pay it off. It’s effectively a savings account of sorts, but the payment information will get reported to the credit bureaus. This means that a person who keeps up with payments will start to build credit up over time.
Get a Cosigner on a Loan

This requires getting someone, usually a family member or a friend with a good credit history, to pay off a loan if you can’t. No one really wants to wreck someone else’s credit, so it’s could be a good idea to only borrow a small amount for which you already have the cash built up to pay it back. Repeated on-time payments will slowly start to build up a higher credit score.

While building up credit can seem like a daunting task, it can be done over time. Making sure that you pay off the minimum amount due each month is key to keeping a credit score after you’ve earned one. Those who keep a high score will benefit by paying less in interest over time.