Suppose you haven’t financed a car loan, a
computer, or some other major purchase. How do you begin to
establish credit? Consider applying for a secured credit card.
It requires that you open and maintain a bank account or other
asset account at a financial institution as security for your
line of credit. Your credit line will be a percentage of your
deposit, typically from 50 to 100 percent. Application and
processing fees are not uncommon for secured credit cards. In
addition, secured credit cards usually carry higher interest
rates than traditional nonsecured cards.
Also consider asking someone with an
established credit history — perhaps a relative — to co-sign
the account if you don’t qualify for credit on your own. The
co-signer promises to pay your debts if you don’t. You’ll want
to repay any debt promptly so you can build a credit history
and apply for credit in the future on your own.
A positive credit history is an asset, not
only when you apply for a credit card, but also when you apply
for a job or insurance, or when you want to finance a car or a
home.
