We have all heard about it and we have all seen it; some of us abuse it and some of us are afraid of it, but we should all take advantage of it. Credit, whether in the form of a card, a car loan, or maybe even a mortgage, is an invaluable tool that allows us all to meet our needs and wants before we have the ability to actually pay for them in full. Credit is what allows us to live the fairly lavish lifestyles that middle class America has become accustomed without the lavish paychecks that would otherwise be necessary to support such comforts.

It is clear that credit is a valuable thing, and it should be utilized to help one’s finances, but careful planning and self-control, if you will, needs to become a part of the picture in order to prevent problems that can very well be extensive.

Now that we have decided that credit is a great tool the question that comes to mind is how does one acquire it? Some have quickly realized that simply applying for a car loan or a credit card will not produce the results that we want. Banks and creditors do not lend money to just anyone; they, as any business interested in being successful, want to minimize risk by loaning money to trustworthy people. The key word here is trustworthy, you must prove that you are responsible before you can borrow anything. Your credit report is your reputation, based on which a company will decide whether giving you a loan is too risky. The problem many of us have is that we have no established track record, and as they say: you need credit to get credit.

So what’s anyone without credit to do in order to get a credit card? Start small and try to involve a family member if possible. The simplest thing to do may be to open up a joint account with your parents or significant other. But be careful, if their credit is not good to begin with, it certainly won’t help your cause. Their credit history will surely affect yours, and you only want to take advantage of it if it is good!

The other option is to start with a large retailer store card, such as a Wal-Mart card or Target. These places offer very little credit, sometimes as low as $200.00 but it may be the easiest place to start. You should get a card from a place where you do shop regularly though, as your card will be limited to this retailer, and to build a credit you have to use it. If you are in the construction business, you may want to go with Home Depot for example.

Make your regular purchases on the card, making sure you do not exceed the limit and you do not spend more than you can pay for with cash. As soon as your bill arrives, pay your card off right away. Paying it off will prevent you from having to pay interest and you will show the credit card company that you are responsible in your budgeting.

Continue doing this for a few months, after which you may likely receive an increase in credit from the lender.

Note: Be careful with offers for secured credit cards and membership fees. You do not need to spend any money on fees to have good credit and you shouldn’t. Never sign up for a card with annual fees, even with some of the extra benefits they are usually not worth it.

After a couple of months of using your card, you may apply for another card, preferably with a large national bank, that may offer you different credit products based on your credit. If you apply with a small bank with limited offers, you are more likely to be denied in the beginning, so look around and talk to the representatives before applying.

So why not just apply for as many credit cards as possible and see which ones will accept you? This is a trap that many people fall into, but the reality is that credit applications are not college applications. Each time a company looks at your credit report, a note of that inquiry is left on your report, and they do not go away for quite some time, often for for at least a year. Too many inquires will actually lower your credit score, because it is a warning to lenders that you are attempting to substantially increase your borrowing ability, which may signal risk to the lender.

After you get your new card, continue the same process of using it and paying it off every month. Buy groceries, gas and pay all your regular expenses, but again make sure not to spend more than you can actually afford. The point here is to build up credit so that you can get a bigger loan when you actually need it. Make sure, however, that your particular card does not have fees for paying off your bill each month.