

It could confront you when you're looking to rent a big-city apartment and the broker asks you to authorize a credit check. Or when you apply for a credit card and get rejected.

Your credit history can affect all manner of things. It can impact whether you qualify for a mortgage, car loan or credit card, plus what interest rate you'll pay. It's used by employers, landlords and even Internet providers.

Yet, according to recent data from Experian, Millennials lag other generations when it comes to their credit. They have an average credit score of 625, the lowest of any generation and almost 50 points below the national average. That doesn't necessarily mean they don't pay their bills, just that they haven't taken the steps necessary to build up a credit record.

"This generation has been slower to use credit," says Experian's Michele Raneri. Millennials are more skeptical of financial institutions, experts say, having watched their parents struggle with unemployment and debt during the 2008 financial crisis. Plus, they're already shouldering massive student loan debt, which makes them wary of taking on more debt to buy cars and homes.

Stringent regulations have also played a role. The CARD Act, passed by Congress in 2009, clamped down on the number of young people with credit cards by making 21 the standard age at which they're eligible. According to a recent survey by Bankrate, some 63% of those ages 18 to 29 don’t have a credit card, whereas only 35% of those who are 30 or older lack at least one card.

While waiting to use credit might seem prudent, the problem is that you aren't building a good credit score. Your credit score is calculated from the information in your credit reports, which essentially document your history of paying back money you've borrowed. In other words, if you've never had a credit card or taken out any loans, your credit history is probably pretty blank.

"The first step is realizing there's a problem," says Sean McQuay, a credit card expert at NerdWallet. "You need to figure out this matters." What if you don't think you'll be buying a car or home or otherwise tapping credit for years? Pay attention anyway---a high credit score isn't something you can build in a hurry.

"You get credit for having experience in credit, so to speak," says Gerri Detweiler, a credit expert at Credit.com. "The one thing not to do is just ignore it and think you'll establish credit when you need it," she says.

Here are three steps for building credit from scratch:

1. Start by checking your credit. First thing's first. If you've never checked your credit before, you'll want to see what you're working with. Request all three of your credit reports -- one from the each of the big three credit bureaus, , Experian and TransUnion -- by going to annualcreditreport.com. Under federal law, you get your reports for free once per year.

When you're looking at your reports, scan for incorrect information. If you find something that looks wrong or unfamiliar, get it fixed right away. (See: How To Scrub Your Credit Report Clean Of Costly Errors)

Then pull your credit score for free at a site like CreditKarma.com, Credit.com or CreditSesame.com. Credit scores range from 300 to 850. Anything above 780 is considered very good and anything below 600 is considered fair to bad.

2. Consider a credit card. Outside of getting a credit card, your options for building credit include student loans, personal loans, auto loans and mortgages. "All of those are much heavier decisions than signing up for a credit card," says McQuay. A credit card is the only option that is "accessible and wise for the young consumer," he adds.

It's also the easiest on your wallet if you use it correctly. While all loans inevitably come with some kind of interest, you can avoid paying a dime of interest on a credit card by paying it off every month. "I hate to recommend someone pays interest to build credit," says Detweiler.

(Bloomberg/Bloomberg via Getty Images)

If you want to build credit, it might be time to add one of these to your wallet. (Bloomberg/Bloomberg via Getty Images)

Your credit score will inform what type of credit card you are looking for. If you find you actually have a good score -- maybe because you've been paying student loans or your parents put you on one of their credit cards at some point -- you can probably look for a mainstream rewards credit card.

Keep in mind, however, that the credit card issuer will ask you for things like your employment status, occupation, annual income and housing expenses in an attempt to understand your ability to pay your credit card bill. So even with a good credit score, if you have no savings, no job and lots of student loans, you could find yourself on the receiving end of a rejection letter.

The reason you want to apply for a credit card you think you can qualify for is because each application lowers your credit score slightly. This is because of something called a "hard inquiry," which happens every time a credit card company or other lender checks your credit history at your request. (If they check it without your permission, just to see if you're a good marketing target, that's a soft inquiry that shouldn't affect your score.) So don't simply shoot off a bunch of credit card applications that might be rejected.

"Especially for younger consumers and anyone trying to build their credit, avoid applying for credit cards too often," says McQuay, who suggests waiting six months to a year between card applications. If you're denied, don't rush off to apply for another card right away, because your credit score will be slightly worse every time you do this.

Also remember to apply for a credit card you plan to keep for the long run, preferably a card with no annual fee, since having the same card for a long time will help you raise your credit score.

What if your credit score is low or you don't think you'll qualify for a mainstream card? Your best bets are:

- A credit card geared toward people with average credit. There are some credit cards that don't require you to have a pristine credit score, like BarclayCard Rewards. Watch out for fees and extra-high interest rates, however.

- A secured card. This is a good way to show that you can handle a credit card. It's a credit card with training wheels, if you will. You'll be asked to deposit your own money in advance–say $300 or $500–which acts as your spending limit. The main purpose of this exercise is to build a credit history, so double check that your payments will be reported to the credit bureaus. Also be on the lookout for fees. A good option is the Capital One Secured MasterCard.

- Asking to be an authorized user on a parent's credit card. You can build a credit history by piggybacking off a responsible parent and becoming an authorized user on one of their credit cards. You'll get a credit card to use normally and the credit card activity will show up on your credit reports.

See also: 7 Credit Cards For Recent College Grads

3. Use credit responsibly. The rules to using credit in a responsible manner are pretty straightforward.

- Always pay your credit card bill on time. When you pay a bill late, that information gets routed onto your credit reports and results in a lower credit score. Set up auto-pay to ensure you always pay on time. If you accidentally miss a due date, make the payment as soon as you realize -- credit bureaus are usually only notified after it has been 30 days.

-- Always pay your credit card in full. Keep in mind that you don't need to carry a balance on your credit card to be building credit. So pay it in full every month to avoid incurring interest. "In my opinion, this is the only way a credit card should be used," says McQuay.

- Don't max out your credit card. Just because you have a credit card doesn't mean you should spend as much as you possibly can. That makes it harder to pay off and is also bad for your credit score. Why? Because you want to keep your so-called utilization ratio low---that's the percentage of your credit line you're using, and a low utilization ratio is good. Let's say your credit limit is $1,000. Experts recommend keeping your utilization at 30% or below, so this means you wouldn't want to charge more than $300 to your card in any given month.

The average millennial is using 43% of his or her  credit limit, according to Experian. That's well above the 30% or less that experts recommend.

To lower your utilization ratio, you can simply charge less to the card. If you want to use your card more regularly (to earn rewards, let's say) but have a low credit limit, you can pay your bill multiple times a month. By keeping your balance perpetually low, you won't run up your utilization ratio.

After six months of using a credit card, check your credit score for progress, says Detweiler. If you didn't have the great credit score needed to snag a regular rewards card and want to graduate to a different card, start looking once your credit score surpasses the 600 level, says McQuay.

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