In the previous article we got the first three fundamental steps out of the way:
1. Getting established with a financial institution
2. Checking/correcting credit reports
3. Establishing a budget.

Now we are ready for credit! Below you will find key points and a continuation of my suggested steps. Keep in mind that there are no guarantees and no quick fixes. I suggest trying one step at a time and evaluating the response before moving to another step. In an effort to quickly build credit, do not rush out and apply for a lot of credit cards at once. Too many applications for credit in a short time are not good. I have talked with many young people (20 somethings) who have tried this and it hurts. They get denied and all of these applications and denials now show on their credit report. This can look desperate or as though there may be some “problem” when the next lender views it. Put yourself in the lender’s shoes. If you saw numerous applications for credit in a short period of time, what would you think? Again, time and patience is the key.

Key points to remember:

  • Make sure the account is being reported to all three credit bureaus.
  • Make sure you use the credit card and pay it off on time every month.
  • You do NOT need to carry a balance to build credit, but you do need to use it.
  • Ultimately, you should strive for a major credit card to break into the 700+ credit score territory. Be prepared if you are new to credit or rebuilding, you may not get this right away and it may take time. These next steps will help you to start building:

    4. Apply for a department store card or gasoline card . Sometimes, not always, these may be easy to get.

    5. Consider having a co-signer. Again making sure it is being reported in your name to the credit bureaus so that you reach your ultimate goal of building a good credit history. I must add that although having a co-signer can be a way to build credit, on the flip-side I do not recommend being a co-signer.

    6. Offer a larger down payment. This goes back to both budgeting and your savings account. If there is something that you really want on credit, and you have little- to-no credit or are recovering from difficulties, what could you offer to convince the lender you are worth a chance? Again, put yourself in the lender’s shoes.

    7. Take out a small loan. This refers back to your financial institution where you are established. No, you don’t need a loan and you don’t need debt. Save the money, don’t spend it, and then make regular, on-time payments. The idea is to show a pattern of financial responsibility that will lead to more things over time.

    8. Consider a secured credit card. If you cannot qualify for a regular unsecured card, then consider a secured version for which you make a deposit and your credit line is generally equal to your deposit. ($500 deposit = $500 credit limit). This can be a stepping stone and an excellent way to build or rebuild credit. Then use the card and pay it off in-full and on-time every month. You would not want a secured card forever, and many will convert this to a regular unsecured card after a period of time. Your goal is to build an established pattern of using credit wisely and get your deposit back! Ask questions before applying (refer to key points) and be aware that many secured cards have fees. This is not the type of card to make mistakes with, so be very careful. Also, you may want to inquire first with where you do your personal banking to see what is available. You can also do research online at, and then select secured credit cards in the drop down box. Again, I am not pushing credit cards, but I am suggesting ways to help build a credit history through careful, thoughtful use.

    9. Lastly, you may want to start your own file , called a non-traditional credit history, of all the good financial things that are not included in your credit reports. These may include regular payments to doctors, hospitals, landlords, and daycare centers to name a few. Even ask for a letter of credit reference from these businesses and place it in your file. Have this file ready and take it with you to present when you feel it is necessary. Use discretion and be honest.

    In summary, building credit takes time and patience. Nothing is a guarantee. Have a plan to actively and wisely apply for and use credit. Make on time payments, and pay down existing balances to help build your credit. If you do not have a written budget now is the time to start! If you have not checked your credit reports within the last year, get started! These resources were listed in my previous article, Want Good Credit – Back to Basics (Part 1) ). You may also access this information on the Links page of my website:

    Copyright © 2009 Kathy Jo Pollack

    Author's Bio: 

    Kathy Jo Pollack is a certified life coach, trainer, and speaker with a focus on finance and relationships. She has worked with thousands of people from all walks of life as the training specialist for Consumer Credit Counseling Service and has taken her passion and expertise to a new level as a coach and writer. She also offers various teleclasses and seminars. Please visit her at: You may also contact her directly at 1-724-224-6619 or