Obligated Disclaimer: I am not a Financial Advisor. This is my opinion. Utilize the information as such that you feel my opinion is worth.

Do NOT start your credit with credit cards. That is the absolutely WORST thing you can do, IMHO. Keep in mind that there are two types of credit and you need to understand which of the two is the most important.

1. Credit Card (High Interest Loan) credit - This is credit you get from credit card companies which are financial lenders. The benefit of this type of credit is that it's what's called "on demand" meaning you can take out a "loan" from almost anywhere at anytime. The other benefit is that it carries more weight with your "credit score". This could also be a huge negative if things turn sour.

2. Bank (Low Interest Loan) credit - This is credit generated independently of your credit score. The negative of this type of credit is that it only mildly affects your "credit score" compared to High Interest Loans. The benefit is that you have much lower monthly payments and you begin independent credit with one particular financial institution. This means, that when it comes to qualifying you for a large loan (such as for a boat, car, house, etc), they will take their "in house" credit score for you over your FICO credit score.

So, what to do? Well, there is an alternate means of also helping to build your FICO score at the same time you build "in house" credit with a bank. They're local loan companies such as World Financial, First Franklin, etc. They are the middle ground. You can take out loans with many of these companies all at the same time. Yes, you'll have to walk in and sign papers to be approved each time you want a loan, but the interest rate won't be as high as a credit card and will build your credit almost as much (if not more). The other benefit is that, like a bank, they won't penalize you for paying over the minimum (something that you'll find in the fine print of a credit card co. agreement).

For instance, in general, the most a credit card co. will loan you at one time is $500. That's it. You'll have to pay that off before you can even think about getting a higher credit line. This is how I started my credit. First, I went to a Jewelry store and bought a $150 ring for my wife on credit. After that was paid off (make sure you stretch it at least 6 months), I went to the bank and they qualified me for $500. To give you an idea, at the time, I was making $12/hr and had been working for over a 1yr (very important). My credit score was also already 512 (from just that one ring purchase that I got on the jewelry stores in house credit...make sure you go to a franchised store and not a local shop. Kay's is where I went). Then I went and got $500 from both World Financial and First Franklin (both had local offices in town). Then I went and secured a $300 and $200 loan from two other local loan companies. So, altogether, I walked away with $2000 in my pocket. The longest term I had on a loan was 9 months. The shortest term was 3 months. 6 months is good, but as long as it's at least 3 months, it will get reported to your "credit score". You'll also build "in house" credit with these financial institutions (make sure you stay away with internet loan companies).

Now, keep in mind, my monthly payments on ALL of my loans was $380. Right now you're probably thinking, wow, there's no way I could manage that. What you don't know because people don't tell you is, you do NOT have to wait until your payment is due to pay. You also don't have to just make one payment a month. At the time, $380 was my entire pay check after taxes. But since we know there's going to be at least 4 weeks in each month, this means I could make a total payment of only $95 a week...which is far more managable (and easier to work into a budget).

By the time 6 months rolled around, I had all of my loans paid off (I used what I had been paying on the shorter term loans to pay on the principle of the longer term loans so I could pay them off early) and had the 675 score that I have today. I would have kept doing the same thing over and over if I wanted to keep pushing my score higher. After I got done paying the $500 loan off at the bank, I could just walk in there and sign my name for $1000 (no collateral needed). I haven't gone back to taking out loans because I haven't needed to yet. I found a way to generate a substantial income and/or obtain the title to a house without needed outstanding credit.

That's because you know all these crazy financial loopholes! You should start an infomercial and wear a lot of tweed.

I found out about them because my wife put me in nearly $2000 worth of debt early in our relationship. She now has a much better concept of how to manage money. You live and you learn.

There are a number of laws that are designed to help you. One of the biggest problems is that most people don't know about them. What's worse, is that lenders try to make it sound like paying over the minimum or making an extra payment hurts your credit more then it helps. In truth, it doesn't really affect your credit in any way. They don't want you over paying or making an extra payment because that drops your monthly payment (because the additional amount paid goes directly towards the principle of the loan, which decrease what portion of the principle loan remains that can have an interest applied to it).

For those of you looking at purchasing a house, look into getting a 30yr mortgage over a 15yr mortgage. You'll have a lower monthly payment. When you get your tax return, deduct 1 mortgage payment out of that and send it to the lender (make sure you mark is as "Principle"). By making one additional payment each year, you can knock 10 years off your mortage (so that you'll actually pay it off in 20yrs instead of 30yrs). All, while you're enjoying a lower monthly payment then that of a 15yr mortgage (which means, more money in your pocket).

There's all sorts of things like this that people should know about. Like how you can actually make all of your payments apply to principle (instead of just a percentage of it). It won't help your credit if you do it that way, but it is possible (it would result in a much lower interest payment). As long as you mark it as "Principle" they are required by law to apply it all to the principle. You should also always shop around for other loan companies. Even if you already have a loan, you can get a loan from another company that might have a lower interest rate or offer a longer term which could be financially easier to manage. For instance, if you have a credit card bill that you're having trouble paying off, try going to a bank and getting a loan from them. Use the loan from the bank to make a payment on your credit card. That way you're paying the banks interest rate for the same amount instead of the credit card's (which is anywhere from 1/3 to 1/5 that of a Credit Card's).

I didn't do anything fancy like that, though my name was in a couple of my parents' accounts. I had a Capital One card for a while (year or two) and my credit score was 716. I was approved for a $5000 vehicle loan with no verifiable income..so something worked out.. :p

Yeah, that's a great way to build credit without doing anything. It's called "Piggy-Backing" where you build your credit based on the association you have with someone that has excellent credit. For instance, if you know someone with good credit that is about to make a big purchase, see if they'll let you co-sign with them. This allows you to build your credit while they make the payments and do everything they would have done anyhow. Just make sure you keep an eye on it and that they don't miss a payment. If they suddenly run into financial problems, be prepared to either cover the payments until they can recover or risk damaging your credit.