If you've never financed a car loan, a computer, or some other major purchase in the past, you'll need to establish credit for yourself.

How does a person begin to establish credit?

To begin with, apply for a credit card issued by a local department store. These types of charge cards are easy to get because they carry an extremely high interest rate and they make that store a lot of money. Usually the credit limit is low, so they almost pass these out like candy.

Use this new charge card responsibly. Make sure that they are reporting your timely payments to a credit bureau. If they do – and if you pay your bills on time – you will begin to establish a good credit history.

Consider investing in your "credit future" by opening a secured credit card. Open and maintain a bank account or other asset account at a financial institution as security for your line of credit.

With a secured card, your credit line will be a percentage of your deposit. This will vary anywhere between 50 to 100 percent, depending on the bank's policies. It's not so important how large of a credit line you get. It's actually more important how much of your credit line you use.

For instance, it will do your credit score more good to have a credit line of $1000, and only use 25% of it, than to have a credit card credit line of $5,000 and carry a $4,900 balance on it.

Application and processing fees are common and usually high for these secured credit cards, so it pays to work only with legitimate banks offering this service. It is also important to note that secured credit cards will generally carry higher interest rates than traditional nonsecured cards.

But again, make small purchases with the card, pay it off in full, and you will be further along the road toward establishing excellent credit.

Finally, ask someone whom you trust -- and who trusts you -- to co-sign the account if you don't qualify for credit on your own.

This gets dicey, and often causes a strain in the relationship. The co-signer is essentially promising to pay your debts if you don't. Be responsible. Repay any debt promptly so you can build a credit history and apply for credit in the future on your own -- and so you'll stay on good terms with your co-signer!

Having 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. You can establish credit, and start building that asset which will help you reach all your future financial goals.

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