Establishing Credit When You Have No Credit History

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It's a catch-22. You need a line of credit to build credit but since you don't have credit, no one wants to extend you a line of credit.

Increasing credit card companies are offering credit cards to college students on campus. I acquired my first credit card when I was shopping at the campus book store for a used book. My first credit card, a MBNA Visa, had a credit limit of $500. Enough to keep me out of trouble but also enough to start building my credit history file.

Here are three strategies for building or rebuilding your credit file.

1. If you have no credit, you can start building credit by applying for a secured credit card. A secured credit card is a type of credit card that requires you to open and maintain a bank savings account. The money in the savings account is used as security against your line of credit, in case you default on any payments. Your credit line is usually 50% to 100% of the money in the savings account.

2. Another strategy to building credit is to apply for an unsecured credit card. An unsecured credit card is a type of credit card that does not require you to secure the card with a savings account. This is the traditional credit card that you've come to know. You can apply for a "no credit history" credit card.

3. If you are having trouble applying for an unsecured credit card, ask a family member to be a cosigner on a credit card.

To increase your chances of getting an unsecured credit card, do the following:

• Apply for cards that are suitable to your financial status. Card issuers have a target demographic or people they want to offer cards to, for each credit card product. Some creditors only want customers with perfect credit.

• Open a checking or savings account in your name. This lends credibility to your financial status.

• Don't overdraw or bounce any checks. Better yet – leave the money in the account and let it be. Most banks will let you open an account with $250 or even less.

• It helps to have a phone number or utility in your name.

Following these basic steps should land you on the road to perfect credit in no time.

Delia Galley writes about consumer debt counseling. Find additional resources about unsecured and secured credits at http://www.poorcreditgenie.com.