Everyone has their own opinion on credit cards. They are a great tool when used correctly. Conversely, they can really harm your credit when they are used incorrectly. In my own personal experience, credit cards have really made my life easier over the years. I primarily use them for small and sometimes large purchases.

The key is to make your payments on time. Like anything else in life you must know your own limitations. This is where the majority of people get themselves in a real bind with credit cards. They over extend themselves. In my opinion, I wouldn't have more than 3 credit cards. Any more than that and your asking for trouble. It's very easy to max a credit card out and only make the monthly minimum payments and the credit card companies love that. They can make a lot of money this way for many years.

If you want to establish credit and build a good credit rating...credit cards are a great tool to do so. I'm in car sales and have had many young people ask me how they can they buy a car if they have no credit? Auto loans are very difficult to get if you have no credit established and it usually requires a good credit co-signer. For people who can't get a co-signer they have to do something on their own. For a young person just starting out, this can be daunting!

The following steps can help establish credit. It is just a general guideline. The time table can be adjusted....

STEP ONE:

Apply for a small max limit credit card...say for $500

STEP TWO:

Once you receive the card go buy a single medium sized ticket item for it. It could be the futon you always wanted or a

small home entertainment system, etc.

STEP THREE:

Make monthly payments on that item for say 6 months, and DON'T BE LATE ON YOUR PAYMENTS!

STEP FOUR:

Congratulations! You just started to establish good credit! But, your not done yet...

STEP FIVE:

Repeat the above four steps again, only ask your credit card company to increase your limit say to $1,000, $2,000 or even $3,000 dollars. Then go out and buy another single ticket item that will be a large purchase to you. Again, make your payments on time and do so over the next 6 months to a year.

Now, is this process lenghty? Yes, but it's very effective! With a decent income and established credit on your credit card/cards, you should be able to easily walk into any auto dealership in the U.S and make your first auto purchase on your own without any help from a co-signer! Not only that, your good credit will give you a great auto loan with a low percentage rate.

Bottom line, don't be afraid to get a credit card if it's your first time and secondly, cut up those credit cards if you have more than three. In addition, don't use credit cards for everyday expenses like paying for groceries and make your payments on time. If your like me and follow these simple and effective guidelines you will LOVE your credit card/cards and your life will be better for it!