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Credit can be a double-edged sword. On one hand, good credit helps you land a secure job, rent a nice apartment, buy a car or house, and get loans with low interest rates. On the other hand, bad credit interferes with your ability to make large purchases, be approved for a credit card or housing. This can lead to a potentially long process of repairing your credit.

Building credit is difficult because banks and credit card companies won't lend you money if you don't have established credit. If you have no credit, you're what's known in the industry as a ghost. You have no history of credit or payments, so companies aren't willing to take a chance on you.

You can take steps to build credit, which, over time, enables you to apply for larger lines of credit. These methods are the only way to get the credit you need, and if you follow each step outlined, you'll soon see your credit score rise.

1.Apply for a secured loan or credit card. Regardless of how much money you make and your on-time payments to Netflix, credit card companies and banks are not likely to invest in you…yet. There are secured loans and credit cards that you can apply for, though. Save up about $500 or $1,000 that you'll use as an upfront payment. This is your collateral essentially.

If you choose a secured credit card, you'll receive a card in the mail and you use it exactly as you would any other credit card. Use it to buy groceries, pay bills or other items. You'll get a monthly statement and you need to pay that bill like any other credit card. Make your payments on time, and try to pay off the balance each month.

After six months to a year, you should have established credit and a fair credit score, as long as you followed the rules of paying your balance in full and on time. It's at this point that you should close the account. You'll receive your deposit back, minus the annual fee, if there is one (and there usually is one).

A secured loan works differently. You borrow money that you don't see until the end of an agreed time period. So, if you borrow $1,000 and agree to pay it back over six months, you make those payments monthly and then receive the money at the end. By then, your payment history, which is reported to credit agencies, help you establish credit.

2. Find someone to co-sign. If you know someone with good credit who trusts you, ask them to co-sign for a loan or credit card. You won't need any credit to be approved because the bank or credit card company is going to use your co-signer's credit score on the application.

If your co-signer is approved, they will be responsible for paying the amount fully owed if you default on your payments. As long as you make regular payments and pay the full balance every month, your co-signer will have nothing to worry about – and you won't pay for more than what you buy, and an annual fee, if one exists.

3. Be an authorized user. When you become an authorized user on someone else's credit account, it's similar to finding a co-signer. The difference is that the line of credit is shared between the person who is responsible for the account and you. You get a credit card with your name on it, and you can use it as a regular credit card. Like the co-signed account, you are not ultimately responsible for the debt.

To ensure good credit and a good relationship with your friend or family member, pay off any charges you incur every month, and in full. This is a good way to establish credit if you have none or very little. It won't dramatically affect your credit score, so when you can get your own credit card, you should.

4. Pay your rent. If you aren't living at home with your parents, then you are likely paying rent to a property owner or property management agency. Historically, those payments aren't reported to credit agencies.

There are companies that exist now that let you make your monthly rent payments to them, they pay your landlord and then report those payments to credit reporting agencies. This helps you build credit, which in turn, lets you apply for lines of credit. However, if you make a late payment, that's reported, too, which can tarnish your credit score.

5. Use your credit, but don't overuse it. Now that you have a credit score, you need to continue building credit to increase your credit score. One way you can ensure your score climbs is to use the credit you have, but don't max out your cards. Creditors raise an eyebrow if you use up all your credit in one fell swoop – it's a red flag for them.

6. Pay your balances in full and on time. One of the most important lessons in building credit is to pay your balance every month in full and on time. Not only is this what creditors look for in their clients, it helps you, too.

If you pay your monthly balance, you won't have to pay interest. Additionally, a late payment is a red flag because debtors don't want to have to send your account into collections – it's costly and takes longer for them to get their money back. You also can avoid expensive late fees.

7. Know your credit score. Remain vigilant with your credit score. You can easily check your credit score from a number of financial institutions for free, and it doesn't affect your score when you check it. It rarely changes more than once per month, and you likely only need to check it once every six months. Look for any discrepancies and challenge them if you don't recognize them.

8. Keep accounts open, even if the balance is zero. This seems an odd choice because you've likely heard that too many open credit card accounts work against your credit score. The bottom line is that it's your credit usage that is measured, so if you have, say $1,500 in credit and five credit cards, with two of those with zero balances, and the other three at max, so $900 used, it looks better to creditors than $900 in credit and only three credit cards with $600 total used.

Establishing credit can be difficult, but it isn't impossible. Once you have it, it's important to manage it so you maintain good credit and continue to build it.

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