A good credit history can determine whether a person can rent a great apartment or gets approved for a loan. It can even get someone a good deal on a cell phone. On the other hand, if someone has no credit history, it’s difficult to receive credit. This is because lenders have no way of telling if the person is a high-risk borrower or if they will pay their bills on time. Building credit is a gradual process; it’s not something that happens overnight. It often takes years of building a credit history in order to be deemed creditworthy. Here are some ideas to begin the journey.

Before taking steps to build credit a consumer should check his credit report to determine if he already has a credit history on file. In the U.S., consumers are allowed to request one free credit report each year. After studying the report, it’s important to ask the credit bureaus to correct any errors that may be listed on the credit history. Once the consumer reviews this important document, he can start the process of building his credit.

An excellent way to establish a credit history is to open a savings or checking account at a bank or credit union. Lenders like to see that applicants have a bank account because it makes applicants seem more financially stable. Once an account is opened, the account holder should apply for a credit card through the bank. Banks may give the account holder a credit card with a low credit limit and gradually increase it once they see that the account holder pays their bills on time.

Another way to build credit is to apply for a secured credit card. These types of cards are ideal for people who have bad credit or who want to create a credit history. First, a consumer deposits money into the account. This becomes the card’s credit limit. For example, if a cardholder deposits $300 into the account, he can charge the card up to $300. Obtaining a secured credit card is a useful way to establish a credit history.

Another way to build credit is to apply for a department store or gas card. It’s usually easier to be approved for these types of cards. The only downside is that store and gas credit cards usually carry a higher interest rate than major credit cards. A consumer should weigh their options and choose a store or gas card that suits their needs. Most importantly, once the consumer receives a credit card, they should never max it out. The goal is to use only 30% or less of the card’s credit limit. This will make a cardholder look more creditworthy to lenders. Cardholders should strive to pay their cards’ balances in full each month. Missing just one payment can lower a person’s credit score and create problems for him in the future.

Many people struggle to qualify for a car loan. If you don’t have a credit history, it will be difficult to do so. One alternative is to find a co-signer. A co-signer may help those without credit to qualify for a car loan. Once a friend or family member co-signs on a loan, they agree to make payments if the primary applicant defaults on the loan.  If the primary applicant makes payments on time, they will build a strong credit history. On the other hand, if they miss payments, this reflects badly not only on their credit, but their co-signer’s credit as well.

Are you a college student? Credit card companies jump at the chance to give credit cards to students. These companies issue cards to college kids because they believe parents will rescue their children if the children encounter problems with paying their bills on time. No matter what you think about these questionable tactics, the fact is that college students can easily get credit cards--even if they don’t have jobs. Because of this it’s imperative that college students limit themselves to just one credit card so that their debt doesn’t spiral out of control.

Establishing a good credit history can take several years of diligently paying bills on time. It requires using money wisely and monitoring your credit report. When a consumer is just starting out, it’s imperative that they take all the necessary steps to make themselves creditworthy to lenders. Work hard to build good credit and lenders will more likely grant you a loan, approve a mortgage, or offer you that coveted credit card.