Ways to start, build, or rebuild your credit history

For those starting out for the first time or having to rebuild credit due to extreme circumstances it can be tough to get that first creditor to start (or restart) your credit history. Their are a couple of options out there that can help. I will go over the best ones that I have found:

  1. Secured Credit Cards: These are generally easy to get. You must put money, such as $500, as collateral on the card. Your credit line equals the amount you put down. Use the card and pay it on time build credit history. Beware of fees as some have very high start up costs. Good secured cards only have a small annual fee around $30-$40. Avoid all others.
  2. CD-backed Loans: Credit unions offer these as a way to build credit. It is a fixed installment loan that uses a Certificate of Deposit (CD) as collateral. The term of the loans equals the term of the CD. The interest rate you pay is usually around 3% more than what the CD earns. This is a small price to pay to establish credit!
  3. Having a co-signer: While this involves risk on the part of the person signing with you it is a good way to gain history. The best road to take is to get a fixed payment installment loan for $1000. This will limit the risk to the co-signer to the amount of the loan. As long as you pay on time you both get good credit! I would only do this if the above 2 options are not available or feasible.
  4. Student Loans: It can be a little difficult to obtain without any credit but student loans in college do establish credit history. A lot of the time parents may have to co-sign but this is still an option. You get the advantage of lower, tax-deductible interest and the ability to defer payments during financial hardship. If you must borrow for college this is the best way and you get credit history as a bonus!
The above methods are the safest and easiest way to start or rebuild a credit history. They are the lowest cost options I could find that actually work. I found that most other methods were some sort of scam and / or they come with high fees. Stick to the basics and you can't go wrong!