Building credit can be tricky. If you don't have a credit history, it's hard to get a loan, a credit card or even an apartment. But how are you supposed to show a history of responsible repayment if no one will give you credit in the first place? Several tools can help you establish a credit history. Here are five:
Apply for a secured credit card
If you are building your credit score from scratch, you will likely start with a secured credit card backed by a cash deposit you make up front. You will use the card like any other credit card: Buy things, make a payment on or before the due date, incur interest if you don't pay your balance in full. Your cash deposit is used as collateral if you fail to make payments. You will receive your deposit back when you close the account.
Apply for a credit-builder loan
A credit-builder loan is exactly what it sounds like — its sole purpose is to help people build credit. Typically, the money you borrow is held by the lender in an account and not released to you until the loan is repaid. It's a forced savings program of sorts, and your payments are reported to credit bureaus. These loans are most often offered by credit unions or community banks; at least one lender offers them online.
Get a co-signer
It's also possible to get a loan or an unsecured credit card using a co-signer. But be sure that you and the co-signer understand that the co-signer is on the hook for the full amount owed if you don't pay. (See "What You Need to Know About Co-signing.")
Become an authorized user on someone else's card
A family member or significant other may be willing to add you as an authorized user on his or her card. As an authorized user, you will enjoy access to a credit card and you will build credit history, but you aren't legally obligated to pay for your charges. Find out whether the card issuer reports authorized user activity to the credit bureaus.
Get credit for the rent you pay
Rent-reporting services such as Rental Kharma and RentTrack take a bill you are already paying and put it on your credit report, helping to build a positive history of on-time payments. Not every credit score takes these payments into account, but some do, and that may be enough to get a loan or credit card that firmly establishes your credit history for all lenders.