How to Safely Build Credit

It’s becoming increasingly clear, especially in this economy, that having a good credit score is absolutely crucial. Whether it’s credit checks for job applications or one of the other unexpected places your score is used, it’s clear that your credit score has a significant impact on your life… even if you don’t need a loan.

That’s why it’s absolutely crucial to begin building a responsible credit history as soon as possible. It might feel like you’re reinforcing a broken system but, then again, you probably don’t use kilometers and kilograms either.

The first step is to see if you’ve already developed a credit history. If so, you can skip this article entirely as you’re well on your way to building credit. It’s important to review your credit reports at at least once a year from each bureau.

If you have no report or it’s completely devoid of accounts, try applying for a credit card. Despite the economy and the higher requirements for other loans, like mortgages, getting a credit card is still relatively easy. If you have income, chances are you will be approved for a small line of credit. If you aren’t, the next best option is to try to apply for a retail credit card, such as from a department store. Those cards have very low limits, often in the hundreds of dollars, but they all count (practically) the same when you’re building your credit.

If you can’t get an unsecured credit card, you have two options. The first is to be added as an authorized user on another person’s card, known as credit piggybacking. The second is to apply for a joint account with someone else that you trust. You may have remembered during the debate on the CARD Act that many student advocates were upset that students without income would be required to have a co-signer, usually their parents, on credit card applications – this is an alternative open to anyone.

Finally, if all else fails, you can try a secured credit card. Secured credit cards are often expensive, having application and maintenance fees, but if you shop around you can often find very affordable secured credit cards from major banks.

Once you get a card, pay it off in full and don’t charge more than you can pay within a single payment period. You don’t get bonus points for carrying a balance and paying the credit card company interest or fees. 35% of your credit score depends entirely on your ability to pay on-time and experts say a solid 2-year history can put you on track for a good credit score.

Jim writes about personal finance at

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