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  • If you're just getting started in managing your own finances or perhaps have simply never used anything but cash and a checkbook, you may decide it's time to apply for a credit card. However, it can be difficult to get approved for a card with no pre-established credit history. There are steps you can take, however, to get a decent card and begin to build credit, so that in the future a better credit card can be obtained much easier.

    Process

    A secure credit card is essentially a line of credit taken out at your bank and placed on a prepaid card. These are designed for people with either no credit looking to get their first card or for those with bad credit looking to repair and raise their credit score. The secure card is usually opened based on the amount you have in your bank account, and often there will be a minimum amount. This also means that if you have a bank account in fairly good standing and with a large amount residing in it on a regular basis, you should be able to get a secure card with a decent spending limit. You'll then be able to use this card and provided that you make full payments on time each month it will slowly help establish and raise your credit until the time comes that you can apply for unsecured cards. There are some things to look out for when dealing with unsecured cards, though. If you choose to use a financial outlet that isn't your personal bank or credit union you need to make sure that it reports to the major credit agencies regularly. If it doesn't, then the activity and good standing you maintain on the card will won't go toward helping your credit. Additionally, try to avoid financial institutions that charge a large monthly fee for a secured card. It's simply paying more for something that you can get without any monthly fee at many other companies.

    Options

    These days just about any major retailer, gas station and various other consumer stores offer their own credit cards. Chances are you've been asked if you'd like to apply for them when you've shopped. Because many stores use non-bank financial companies to handle the cards, they can often be easier to get. Especially with no credit history, it's a good bet that you can be approved for a relatively low-limit card at your favorite department store or gas station chain. Note that these won't help your credit score as much as a standard credit card, but for first establishing some credit it's an excellent and viable option.

    Proper Use

    Obtaining a card with no prior credit history is only beneficial if you make good use of it. Misusing your card will only ensure that your credit never gets positively affected and developed and you'll soon find that you can't get a better card and may wind up paying more for the card you do have. Make sure to pay your credit bill in full each month. This is the key piece that will get reported to credit agencies by your card issuer and is what will most positively affect your building credit. Maintaining an on-time pay schedule and good standing with your card will ensure that you'll soon be able to apply for and get approved for better and unsecured credit cards.

    Source:

    MSN Money Central: Building Credit from Scratch

    360 Degrees of Financial Literacy: Getting Cards with No Credit

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