One of the great ironies of the credit world is you have to have credit to prove you're a good credit risk. But if you've never had credit before, how do you get it for the first time? Basically you have two choices (1) You can start with merchant cards or (2) you can get a secured card...

Although most people prefer bank-issued credit cards (Visa and MasterCard) to credit cards issued by a single - merchant (Mobil, Exxon, Sears), if you have a hard time getting a bank-issued card first, its fine to start with a department store or oil company card first. Just be sure to pay the balance in full each month - merchant cards are notorious for charging high interests rates. Then once you've established a credit history with one or more of these merchant cards, try to get a Visa or MasterCard.

It's important to eventually get a Visa or MasterCard because these cards are better for establishing credit. Since merchant cards are generally easier to obtain. Most credit grantors give them less weight than bank cards when assessing your creditworthiness. Plus, you'll have greater flexibility with a bank-issued card, since Visa and MasterCard are accepted all over the world.

Your other alternative is to go get a secured credit card. You have can get a secured Visa or MasterCard card from a bank and it works just like a regular credit card. But instead of the bank issuing you a line of credit, you must make a deposit. Your credit line is equal to the amount of the deposit. As long as you pay your bills, your deposit stays intact and you should build a good credit history. Eventually, after a period of time of timely payments, you will build a good credit record and be able to apply for an unsecured (regular) credit card.

Secured credit cards are also useful for people with poor credit records...

Potential Traps: Secured cards have become big business for con artist.."Credit problems? Turned down for credit?" they advertise. We'll repair your credit immediately. Just send $99" Beware of ads like these. Stick with banks you know...