How to Build a Credit Line

Building your credit is important. It is much easier to do if you plan ahead and know what makes a credit score go up or down. Teenagers should pay special attention to this so that they develop a good credit history by the time they are ready to buy their first home. Teenagers can begin working on their credit lines as soon as they are old enough to drive. It's important for each individual to take control of his finances.

Instructions

1

Apply for a Discover Card. Discover Card is one of the only credit cards that will agree to start teenagers off with a card. You will frequently find them on college campuses. Once you apply and get accepted with Discover Card, you can begin using your card. Don't buy anything you can't pay for. Just use the card even though you have cash. Set your cash aside and pay the balance when it comes in at the end of the month. Paying for items with cash will not establish to any other financial institutions that you are faithful in paying your bills. Using a credit card gives a verifiable record of consistent monthly payments.

2

Buy a used car from a place that offers financing. Again it is great if you have all of the cash you need to pay for your first car. You still want to establish your credit so that you can get a good credit rating. Use a place that offers financing and apply directly at the source. Pay them weekly or monthly, depending on your financial goals.

3

Always pay your school loan on time. You don't need good credit to get a school loan since the loan is based on your parents' salaries. You do, however, need to pay your student loans each month.

4

Consider using your parents as a co-signer. If you are looking at buying a brand new car, you could consider using your parents as co-signers. Just make sure you can make all the payments and that you don't stick your parents with car payments for a car they aren't using. Having a co-signer doesn't affect your credit in a negative way. You can still build a credit line and increase your credit score. You just have to make your payments on time.

5

Set up accounts at local department stores. They are usually more relaxed when it comes to credit rules, and you can get a few cards. Pay what you have in cash and pay off much of the balance at the end of the month. Keep a tiny revolving balance to establish credit worthiness, but never max a credit card out. This shows irresponsible usage to potential lenders.