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How to build a credit history
Don Taylor
Dear Dr. Don,

I have been trying to apply for a credit card so I can start establishing
credit. However, I keep being rejected because I have no established credit.
Is there a credit card out there that will actually accept me?
-- Gary Ground-Up

Dear Gary,
Back when I first established credit, the conventional wisdom was to get a
gas card and a Sears card, then stay current on the payments and eventually
Visa or MasterCard would accept you as a cardholder.
With the cobranding across product lines this strategy doesn't make as much
sense in today's market. My Macy's card, for example, is also a Visa card. I
don't even carry a gas card.

My best advice is, don't flail around trying to get a credit application
accepted. Every credit application shows up on your credit report and stays
there for two years, although it only impacts your credit score over the
first year. A string of credit applications and denials makes you look
desperate for credit, and lenders hate lending to desperate people.
The Fair and Accurate Credit Transactions Act of 2003 gives you free access
to your credit report once each year. There are three major credit bureaus,
Equifax, Experian and TransUnion. I suggest rotating through the group so
you're requesting a credit report once every four months. The Bankrate
feature, "How to get your free credit report," provides you with the contact
information to request these free reports.

You're also entitled to a free credit report each time you're denied credit
by the credit bureau(s) the lender used in making the lending decision. You
just have to request the report within 30 days of the loan being denied.
Bankrate provides the contact information. Take a look at your credit
report(s) to see the number of inquiries and what other information is on
the report.

If you belong, or are eligible to belong, to a credit union, try applying
for a credit card from that credit union. The National Credit Union
Administration Web site can help you find credit unions in your area.
Since you've been repeatedly denied credit, if the credit union approach
doesn't work, I'd suggest getting a secured credit card. With a secured
credit card you deposit funds with the card provider. Your credit line
typically is limited to the amount on deposit. You're establishing a payment
history, but the credit card company isn't taking on any real risk that you
won't pay. You can search secured card offerings on Bankrate. While you're
at it take a look at the Bankrate feature, "Baby-step your way to credit
with a secured credit card," about secured credit cards. Good luck!