Your credit history can determine whether you get a good job, a decent apartment or reasonable rates on insurance. If you're just starting out, you have a once-in-a-lifetime opportunity to build a credit history the right way. Here's what to do, and what to avoid.

#1: Check your credit report

You'll first want to see what, if anything, lenders are saying about you. That kind of information is contained in your credit report at each of the three major bureaus: Equifax, Experian and TransUnion. Credit reports are used to create your credit score, the three-digit number lenders typically use to gauge your creditworthiness. Lenders also may look at the report itself, as may the landlords, employers and insurance companies who use credit to evaluate applicants.

#2: Establish checking and savings accounts

Lenders see these accounts as signs of stability. Opening checking and savings account is also one of the few things you can do as a minor to start building a financial history.

#3: Understand the basics of credit scoring

You need to know that the two most important factors in your score are:

• Whether you pay your bills on time.
• How much of your available credit you actually use.

It's essential that you pay all your bills on time, all the time. Set up automatic payments or reminder systems so that you're never, ever late. Keeping your credit use to less than 30% of your credit limits will help you get the best possible credit score.

#4: Apply for credit while you're a college student

It turns out that there's no easier time to get a card than while you're a college student. Look for a card with a low or nonexistent annual fee and low interest rates. Opening a slew of credit accounts in a short period of time can make you look like a risky customer.

#5: Apply for a secured credit card

If you can't get a regular credit card, apply for the secured version. These require you to deposit money with a lender; your credit limit is usually equal to the deposit.
Ideally, the card you pick would:

• Have no application fee and a low annual fee
• Convert to a regular, unsecured credit card after 12 to 18 months of on-time payments
• Be reported to all three credit bureaus - If it doesn’t, the card won't help build your credit history.

#6: Get a finance company card

Gas companies and department stores that issue charge cards typically use finance companies, rather than major banks, to handle the transactions. These cards don't do as much for your credit score as a bank card (Visa, MasterCard, Discover, etc.), but they're usually easier to get.

#7: Get an installment loan

To get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages). Once you've had and used plastic responsibly for a year or so, consider applying for a small installment loan from your credit union or bank. Keeping the duration short -- no more than a year or two -- will help you build credit while limiting the amount of interest you pay.

#8: Use revolving accounts lightly but regularly

For a credit score to be generated, you have to have had credit for at least six months, with at least one of your accounts updated in the past six months. Using your cards regularly should ensure that your report is updated regularly. It also will keep the lender interested in you as a customer. If you get a credit card and never use it, the issuer could cancel the account.
Just remember the credit tips mentioned earlier:
• Don't charge more than 30% of the card's limit.
• Don't charge more than you can pay off in a month. As mentioned earlier, you don't have to pay interest on a credit card to get a good credit score, and it's a smart financial habit to pay off your credit cards in full each month.
• Make sure you pay the bill, and all your other bills, on time.

The reaction from consumers was loud and angry and Congressional representatives responded by passing pro-consumer legislation under The Credit Card Act of 2009. While tighter restrictions on credit card companies is a good thing, don't be fooled into thinking that all the credit card mess has been solved.

Many of the changes do not take effect until February 2010 and until then some credit card companies continue to exploit their customers, even the ones with good credit. You'll need to remain vigilant and closely monitor your credit card activity.

Avoid late fees. Many card companies have significantly increased fees for late payment. If you mail in your payment, be sure to mail it early enough to get there on time.

On two recent occasions, I mailed payments that I thought allowed ample time to arrive by the deadline only to find out they "posted" my payment one day late. The result - a $39 late payment fee. One solution is to go online on the due date to be certain your payment was received. If not, you can pay immediately online to avoid the penalty.

Keep your cards active. Because of the financial crunch, many card companies are terminating cards of customers who are not using their credit card. The reason? The company has extended you credit that you are not using and because of the financial crisis, they are under pressure to reduce the amount of credit they have extended. Since they are not making any money on you, terminating your credit becomes their best solution.

Your best move is to use your credit cards but pay off your balance every month, on time. Think of it as an extension of your checking account rather than a source for borrowing money you don't have.

Shred those "convenience" checks. These are the blank checks that your credit card sends you and encourages you to use to pay off bills or treat yourself to a trip to the mall.

First, the checks are nothing more than an advance against your credit card and carry very high transaction fees and often much higher interest rates.
There is no "grace period," meaning interest is calculated from the moment you use the check and you lose protections that go with credit card purchases granted under the Fair Credit Billing Act such as refunds for defective merchandise.

You also don't receive bonus or reward points such as free airline tickets.
Shred them so they don't fall into dishonest hands, or even better, contact your credit card company and tell them not to send them in the future.

Credit cards continue to be a useful tool in your money toolbox. They help establish and build your credit, are a convenient method of paying for goods and services without having to carry large amounts of cash, and can provide reward points that you can use for free purchases such as airline tickets.