Can't get a credit card? Here's another option

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In this economy, if you have no credit or bad credit, establishing a good financial reputation can be a dubious and intimidating prospect. But without credit, financing for a car, home or college loan is almost entirely out of reach.

"It is sort of like a Catch-22," said Yahoo! finance expert Farnoosh Torabi. "You need credit to establish credit."

So, how do you handle this credit conundrum? Torabi offers a few credit-making tips for those starting over or just starting out:


Get a secured card

Go to a local credit union and inquire about a secured credit card. A secured card is a credit card backed by a balance that you maintain in a savings account. Start with a small credit line of $500 to $1,000.

Use the card

Take the time to establish a record by borrowing against the account. Use the card like a credit card—small purchases at grocery stores or department stores are ideal.

Pay your bill

Make sure you pay off the entire balance of your card each month. This activity is reported to credit agencies and will show creditors that you are responsible and worthy of graduating to a real credit card.

Keep up healthy financial habits once you have secured good standing, and don't forget to check your credit report and credit score often.