There are a number of ways to begin establishing a credit score so you can enjoy low rates on everything from credit cards to home loans.

If you are starting from scratch, it is probably best to follow these steps:

• Apply for a secured credit card – We like secured credit cards because individuals with no credit or poor credit can use them to establish a strong credit history. Here’s how a secured credit card works: a secured credit card requires a deposit, which is usually equal to your credit limit. In other words, if you accept a secured credit card with a $500 credit limit you will likely be required to hand over a deposit for $500, as well. The deposit is held by the creditor and only used if you fail to pay on your credit card. If you cancel the card or transfer the card into an unsecured card, you will receive your deposit back, in full. Once you begin establishing a history with the secured credit card company they may either reduce your deposit amount or increase your credit limit. Make sure the company you choose reports your monthly payments to the credit reporting agencies. Some secured credit card companies report only quarterly, so it is important to find a creditor who reports on a monthly basis.
• Apply for a retail credit card – Although retail credit cards are do not come highly recommended by financial experts because of their high interest rates and fees, they are much easier to get for individuals with little to no credit. With that said, you may find that a retail credit card is a good tool for establishing credit. Just be careful and pay off your balance in full, each month, as to avoid costly finance charges.
• Apply for a college credit card – If you are a college student, you may be eligible for one of the many college student credit cards. Most of these cards are designed for individuals with little to no credit history, making them ideal for college students. Be careful, however, as these cards often come with high interest rates.

The truth is that spending on a credit card is a very easy action that is often done with little forethought. And that could mean a recipe for disaster. If you want to keep your credit card spending under control, here are some tried-and-true words of advice:

• Never spend beyond your means – Many people have heard this, but few people really abide by it. Turn your spending into things you truly want and can afford, not things you want but really cannot afford. As a general rule, if you cannot afford to pay off your purchase in a month or two, you probably shouldn’t purchase it. And the best case scenario is to charge only what you can afford to pay in full the following month.
• Think twice before using a retail credit card – Retail credit cards are so enticing. From their special coupons and deals to their “member only” perks, it is very easy to fall into the trap of a retail credit card. However, this enticing card may also come with a hefty interest rate and even heftier fees. Plus, many studies have shown that people spend much more in a store when they have a store credit card in their back pocket.
• Cut down on your credit cards – The truth is that most people need only two credit cards: one for everyday spending and another one for emergency use. Don’t go overboard and shove numerous credit cards in your wallet; it will only encourage overspending.
• Stop and think before you charge – Often times, simply by stepping back and taking a moment to stop and think about the purchase you are about to make on your credit card, you may spend less. Credit card spending, because it requires no upfront cash, is a habit that can quickly spin out of control if you don’t really take the time to reevaluate the importance of your purchases.

Make this year your year for taking control of your holiday budget and implementing a plan of action that can be achieved.

Here’s what you need to know before heading diving into the retail madness this holiday season.

• Budget for absolutely everything. Sure, you’ve included the gifts, but did you also account for all those little “extras” that can add up to more than you bargained for? Include everything in your budget, from Christmas cards and postage to holiday cookie ingredients and charitable contributions. And don’t forget to factor in the cost of travel if you plan on visiting out-of-town family and friends over the holiday season.
• Don’t forget all the holiday goodies you deliver to everyone, from your hair stylist to your mail carrier. These small holiday gifts and monetary gifts are often unplanned, but can prove to be quite expensive.
• Make a realistic budget for everyone on your list – You may set a budget of $50 for each family member, but how realistic is that budget? If you know you will inevitably spend more, set a more realistic budget so you can be sure you stick to it.
• Bring your credit cards, but think twice about retail cards – Retail credit cards may seem tempting to use, especially during the holiday season, but they can spell big trouble afterward due to their steep interest rates. Instead, stick to your major credit card with the low, competitive interest rate.
• Don’t wait until the last minute to begin spending – One of the best ways to ensure your credit card spending gets out of control is to wait until the last minute when panic spending kicks in. Instead, do yourself a favor and begin purchasing holiday items now so that you won’t find yourself rushing about in a last-minute buying frenzy. Plus, you can be sure to snag a few deals this year, as retailers are offering earlier deals to customers in anticipation of early holiday shopping!

Although each financial situation is different, there are a key set of tips that will never guide you wrong and never let you down when it comes to managing your finances and your credit card debt:

• Pay on time – So this first tip may sound a bit obvious, it begs repeating: you must pay your credit card bills on time, each and every month, if you expect to enjoy a strong credit rating. Although you may think that your late payments are not such a big deal, understand that creditors and the credit reporting bureaus may not agree with you. If you have a difficult time paying your bill on time, consider setting up automatic bill payment through your credit card or your bank.
• Stay away from any type of “convenience” offered by your creditor – In particular, avoid at all costs cash advances, as they come with hefty fees and are looked down upon by the credit reporting agencies when it comes to your FICO score, and convenience checks, as there are almost always fees and other strings attached to them.
• If you don’t need it, don’t get it – Simply put, applying for a credit card merely to get rewards or other perks is a tricky situation in which to put yourself. In particular, be extra careful when it comes to retail credit cards, as they are notorious for offering attractive deals, while at the same time charging super-high interest rates. It also never hurts to take an inventory of your credit cards on an annual basis to ensure that they are still working for you.
• Be diligent when it comes to checking your credit card accounts and credit score. Don’t just pay your balance each month; take the time to look over your statement and double check all of the charges.  Order a copy of your credit report at least once a year, or more if you suspect foul play. It never pays to be too diligent!

However, like any other type of financial tool, you should make sure that this is the best option for you. Here’s what to remember before making a large purchase on a credit card:

• Consider your credit card’s interest rate and do the math to see if it worth charging a large purchase. In addition, don’t forget to consider what your minimum payment will be once you have charged the large purchase.
• Some credit cards offer special introductory rates, but pay close attention to the expiration of the introductory rate, as this could affect the amount you pay in finance charges if you are unable to pay off the purchase before the expiration of the introductory rate.
• Consider using convenience checks that often come in the mail from your credit card company. Convenience checks often come with lower interest rates, and often these interest rates are fixed for the purchase. However, consider the fee charged by the credit card company for the convenience of using these convenience checks; often times, these fees can be quite high.
• Before making a large purchase, consider whether it will put your credit limit at its maximum.  In other words, always avoid carrying more than 30 percent of your credit limit on your credit card, as this can lower your credit score.
• If you plan on making a particularly large purchase, you may want to call your credit card company ahead of time to alert them to this charge. Many credit card companies will decline a large purchase if they suspect fraudulent activity. It is therefore wise to avoid the hassle and embarrassment of a credit card denial by calling ahead and alerting them of the impending purchase.

Making your way out into the world beyond college takes hard work, determination, a good work ethic, and good credit. Although it sounds a bit weird that credit should play such a big role when it comes to independent living, the fact of the matter is that it is quite important for everything from renting an apartment to purchasing a car.

With the recent credit card legislation changes enacted by the CARD Act, many college students are no longer eligible to receive a student credit card unless their parents co-sign for it. Although the new legislation was brought about as a way to protect young adults from getting into debt even before they graduate from college, it has also made it incredibly difficult for them to establish credit during their college years.

The fact of the matter is that establishing credit is very important when heading out into the real world, and having no credit can make the process of moving on from college quite difficult. With that said, if you desire to establish a credit history, there are some things that can get you started:

• An active bank account – Make sure to keep your checking and savings accounts in good standing, and make sure to not overdraw them. Your bank accounts will likely be the first factor that will go into your official credit score, so make sure to keep them in good standing, as this clearly shows creditors that you are responsible with your money.
• Once you have maintained an active bank account at one, particular bank, go to the bank and open a credit card account. The company through with you have your bank account is the most obvious option when applying for your first credit card, as you have a history with them that they can draw from when determining whether you are eligible to receive a credit card.
• If you are unable to secure a major credit card right away, consider applying for a retail credit card. Although retail cards typically come with higher APRs than major credit cards, they are often an easy way to begin establishing a positive credit history. Just be sure to pay off your bill each month as to avoid costly finance charges.

In 2009 alone, 68 percent of Americans said they participated in some kind of credit card rewards program; that’s an increase of 10 percent over 2008.

With so many people using credit card rewards points there are now many options for spending them. Here are a few tips that will put you on the right track when it comes to your credit card rewards points:

• If you have only considered cash-back reward programs in the past, consider looking at airline, retailer or hotel credit cards, as often their rewards programs often beat out cash-back programs. Many hotel, airline and retailer credit cards offer back up to two percent in gift certificates, compared with about one percent when dealing with cash-back credit cards. In fact, some airline credit card rewards programs offer even better deals!
• If you have several rewards credit cards, check out the deals on all of them, as they may differ from one company to the next. For example, a rental car may cost you fewer points on one card than it does another.
• Don’t assume you have to amass thousands of credit card rewards points in order to cash in. In fact, because there are so many rewards programs out there, many credit card companies are offering rewards with fewer points. In other words, instead of waiting around to get enough points to pay for an airline ticket, indulge in a restaurant gift card and enjoy a night out on the town.
• Don’t assume you have to cash in on prizes using all rewards points. In other words, you can often pay for an airline ticket, for example, using some points and some cash.

However, are retail credit cards all they are really cracked up to be?

You may find it all a bit too tempting when you go to make a purchase and a store associate tells you that you can open a store credit card within minutes and save as much as 20 percent on your purchase. This is usually the time when you must make a decision regarding the advantages and disadvantages of owning a retail credit card.

Weighing a Discount vs. a High Interest Rate

If you know, unequivocally, that you will pay off your credit card purchase when your first statement comes then it may be worth your while to open a retail credit card account. However, if you even have the smallest inkling that you may not be able to pay the balance in full then you are probably better off passing on using a store credit card.

This is because retail credit cards come with notoriously high interest rates. In other words, any discount that you may have received for opening a new account will likely be erased the first time you are unable to pay your bill in full.

Too Much Temptation

Another factor to consider is your spending habits. Many times, individuals armed with retail credit cards are likely to spend more than if they were using another form of payment.

You may find yourself making more frequent purchases, purchasing more expensive items or simply purchasing more than you otherwise would have if you were paying with cash, for example.

Consider your Credit Score

Although a nice payment history on a store credit card may bode well for your credit score, missing even one payment may have a strong impact on your credit score, in a negative way. Plus, retail credit cards have lower credit limits, which may just not make much sense when you have a perfectly good major credit card with a low, fixed interest rate.

Retail credit cards certainly have their share of advantages and disadvantages, so what might be right for one consumer may not be right for another.

Let’s compare the two:

Advantages of Retail Credit Cards

• Instant approval – There is nothing like being able to purchase items from your favorite retailer when they are able to approve you in just minutes.
• Instant discount – Many retailers offer customers additional incentives for applying for instant store credit by discounting the day’s purchases.
• Future coupons/discounts – Many retailers, in an attempt to lure their customers back into the store send them coupons in the mail, usually along with their statement.
• Special promotions/events for card holders – Another ploy of retailers to get their credit card holders back into the store is to offer card holder-only promotions and events.

Disadvantages of Retail Credit Cards

• High interest rates – It is important to realize that, along with the convenience, comes high interest rates. Over-the-limit fees and late-payment fees for retail credit cards can be quite high, as well.
• More credit – do you need it? – The real question when deciding upon a retail credit card is, “Do I really need another credit card?” For many consumers, a standard credit card with a low interest rate may be a much better option than opening yet another credit account.
• Impulse buys/overspending – Perhaps the biggest reason that many consumers avoid retail credit cards is that they often encourage impulse buying and overspending, Sometimes it is all a bit too tempting to walk into a retailer and buy more than we need, simply because we come armed with our store credit card. Consider whether you can make responsible purchases with a retail credit card before applying for one.