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In general there is typically a natural progression for people that are building or rebuilding their credit.

Stage One usually works to show a lender that a person is capable and responsible enough to make payments in full and all time.  Its about building payment history.  However, you have to have a loan before you can build a payment history.  So most people end up taking out a secured loan or getting a family member to cosign on a loan - in essence providing their personal credit as security.

Stage two often includes taking out a small unsecured loan or developing a history of paying off several personal loans.  Sometimes this is done with credit cards or department store cards or even a small bank loan.  Sometimes the bank loan might even be used to buy a car that does not use the title as collateral.

This often then allows a person to transition in to Stage Four, where they buy a new or relatively new car.  The car title is used as collateral or security.  These loans are typically for large amounts of money in excess of $5,000 and often times can be as much as $20 or $30,000.  This again helps build a payment history with a much higher payment.

Stage Five is the time when most people prepare to make the largest purchase and possibly largest investment they will ever make.  They buy a home and utilize the home and or property as collateral for a mortgage.  These mortgages can lead to an entirely extra set of stages that include refinancing, home equity loans, business loans and much more.