A classic counseling position is one where an individual is unable to meet his or her financial commitments with income alone. Some creditors might already have initiated recovery proceedings or alternate legal action. Declaring bankruptcy seems the only alternative, but such an action will impact the person’s credit record for the next 7 to 10 years.

In such an instance, a non-profit counseling service could come up with a more palatable alternative. A debtor could furnish full details of all dues and undertake some debt counseling. The counselor will consolidate all the outstanding balances and calculate a single payment which will be offered to all the separate creditors. More often than not, creditors are happy with such an arrangement rather than meet the costs of legal proceedings.

One of the first things anyone seeking to get approved for a loan or credit card should do is open a checking and savings account. While having a bank account won’t get you a loan, lenders consider them as a really good sign of stability.

Another good way to establish credit is to have someone add you to their credit card account as a joint account holder. You can also have someone co-sign for a small unsecured personal loan and make sure that you make all the payments on time.

However, keep in mind there can be a bad side to being added as a joint account holder and having someone co-sign for you. If the person adding you to their account has had problems paying the payments, it will also reflect on your credit. And, if someone co-signs and you don’t make the payments, they’re required by law to pay them for you.