10 Healthy Ways to Build Credit


Get a Co-signer

The nice thing about building credit from scratch is that you don't have to do it alone. Most lenders will allow someone with an established credit history -- like your parents, older siblings or a family friend -- to co-sign the credit application with you.

The benefits of co-signing a credit card application or loan application are twofold: The lender no longer has to make a credit decision based solely on your thin credit history and you can "piggyback" on the (hopefully) stellar credit score of your co-signer.

As with any financial transaction, you should be careful when co-signing for credit. First of all, make sure that your co-signer actually has a good credit history. If your older brother tends to exaggerate, don't take his word for it. In the eyes of the lender, you are only as good as your brother's credit score, so ensure that you see it in writing.

Also, stick with co-signers who have a clearly demonstrated relationship with you. Family members with the same surname as yours are always the best bet. A lender might get suspicious if you walk in the door with a seemingly unrelated stranger [source: Steiner].

The most important thing to understand is that co-signing for credit means that both parties are now responsible for its timely repayment. If your dad co-signs your credit card application and you run up hundreds of dollars in late payment fees, both of your credit scores are going to take a hit.