Starting off on the right foot can make all the difference when it comes to building good credit scores for the long term. Before you open your first credit account you should have an understanding of how the credit system works and what goes in to a high credit score. The following steps can help you build a healthy credit history and a positive credit score.


Know where you stand - Before you decide what you need to do to build your credit history, it is a good idea to evaluate your current finances. Check your credit reports to see if you may have an old account or some records in your name already. If you do not have any credit history you will see a "thin file" notification instead of a credit report online. You should also check for signs of identity theft on your credit report. If you find something suspicious you should report it immediately.

Research your options - Now that you have verified that you do not have a credit history already, it is time to think about your options. Most people start to build their credit by opening a department store card or gas card because they are easier for first time borrowers. Secured credit cards (that uses your savings as collateral for the credit limit) are also very common. You may also want to see if there are special offers available to you through your credit union, university or workplace that may fit your needs. Review each offer carefully for high interest rates, annual fees and hidden catches. Keep in mind that if you are not financial stable enough to use credit responsibly it may be best to wait until your situation improves before opening an account.

Open an account - Once you have picked the best credit card offer for you and decided that the time is right, submit your application. If you are accepted, your card will arrive in the mail along with details about your account terms. Your new account should start to be reported to the credit bureaus in 30-60 days. If you are rejected, you will receive a letter and information about why you were turned down. Use the information in the denial letter to improve your finances or find an offer that better fits your needs.

Be responsible - Using your new credit card responsibly each month will help you build a healthy credit score. The best way to build your credit score is to use your first card for a small monthly bill (such as gasoline) and pay the balance on time each month. Don't charge more than 35% of your credit limit to avoid damaging your credit score. If you follow these healthy financial tactics, it is possible to achieve a credit score above 650 in 6-12 months.

Review and move forward - As you continue to build a healthy credit profile, your credit scores should improve fairly quickly and you'll start to receive new offers for credit in the mail. When you decide you want to open another credit account, carefully review the terms before determining if it is right for you. It's best to keep your first account open, but if this account charges expensive fees you may want to close it after you have opened a second new credit card. You should check your credit reports and credit scores every 6-12 months to monitor your credit building progress.