Build Your Credit Fast with These 6 Easy Steps

A good credit score depicts a person’s creditworthiness, and this will give you a chance for lower interest rates when you apply for a loan. If your credit score is not where you want it to be, there are many ways that you can do to improve your score.

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A good credit score depicts a person’s creditworthiness, and this will give you a chance for lower interest rates when you apply for a loan. If your credit score is not where you want it to be, there are many ways that you can do to improve your score.

How Fast Can You Build Your Credit?

A credit score takes time to build and improve. While you can’t transform your score overnight, with steady and consistent efforts, you can see dramatic improvement. If starting from zero, you can expect to build a decent credit score in six months. For the major credit scoring companies to compile enough history of your credit use for a score, you need at least one active account open for a minimum of six months. If you’re trying to repair damaged credit, the longer you have to rebuild it, the better, but you can start to see improvements within three months.

What Can You Do to Boost Your Credit?

Consistent, steady improvement will do the most to improve your credit over time. Nothing happens overnight when it comes to your credit score, but some things contribute more than others. Here are six things you can do to increase your credit.

Apply for a Secured Card

If you want an easy instant-boost to your credit, apply for a secure credit card. These cards require a cash deposit upfront as collateral against the purchases you’ll make. The benefit of this card is your ability to control the credit limit by paying a higher security deposit. 

One of the factors in your credit score is how much credit you use. It’s best to stay under 30%, so if you apply for a secured card and place $1,000 as your security deposit, keep your credit usage under $300. Each month you consistently stay under a 30% credit utilization, you’ll see your credit score improve.

Become an Authorized Credit Card User

This is an incredibly easy way to build your credit, so long as you choose the right person’s credit card. By becoming an authorized user on a friend or relative’s credit card, their credit utilization and history of payment will be reflected in your score. If you have a little credit history, using this tactic works well.

To do this right, you’ll want to make sure you choose someone who has a credit card with a consistent low balance, a history of no late payments, and a high credit limit. Do not sign on to another person’s card if they have a history of poor credit utilization. Their credit behavior, good and bad, will be reflected in your score.

Ask for a Raise of Credit Limit

If you consistently struggle to stay under your credit limit, apply to your credit card company for an increase in your credit line. A higher credit limit can help improve your score by keeping your utilization lower. When your credit line increased, the increase itself is also reflected favorably on your credit score. An increase in credit demonstrates that you are viewed as a stable cardholder by credit card companies.

Correct Wrong Information on Credit Reports

There are many ways to track your credit score. Popular websites and apps such as Experian and Nerd Wallet offer free credit score tracking. But why is monitoring your credit score important? Because knowing when incorrect information is entered into your score is vital for getting it fixed. 

Though it may not happen often, there are times when incorrect information may get entered into your credit report. When this happens, your score could be negatively affected. The only way to reverse this is by having the credit scoring companies such as Equifax, Experian, and TransUnion remove this information. 

When it comes to removing false information from your credit score, it usually takes more than a phone call to point out the mistake. There will be checking, referencing, and the potential for documentation needed from you. It will take some time to get the incorrect information removed, and your score repaired. It is best to get the process started as soon as you notice an inaccuracy pop up, so get your score back to normal quickly.

Make Payments on Time

Your payment history is one of the most significant factors when improving your credit score. On-time payments will always contribute to improving your score. The more record you have of never missing a payment, the more your score will go up. When it comes to payments, you should always pay at least the minimum, as noted on your credit statement each month. Paying more than the minimum is advisable to reduce interest payments and lower your credit utilization. But, if you can only do the minimum, at least do that.

It may not seem like a big deal to miss one or two payments. However, a late payment can cause a drop in your credit score, ranging anywhere from 90 to 110 points. That’s enough to take you from a “good” rating to a “fair” rating and instantly increase interest rates on loans or even disqualify you from obtaining loan approval. Though the score will rise again as you faithfully make payments, you could feel the effects of late payment for as long as seven years. 

Applying Credit Utilization

Credit utilization has to do with how much credit you use in contrast to your credit limit. Low credit utilization is beneficial, and, in general, you shouldn’t use more than 30% of your limit. If you have a credit limit of $1,000, for example, you should keep your credit under $300 each month or until you pay it off. Low utilization sends the message that you know how to manage credit well, and you aren’t at risk of borrowing more than you can payback.

Improving your credit score takes time. Being financially responsible and practicing the steps outlined in this article will help you boost your credit. And while there are many things you can do on your own, if you’re still at a loss, it could be best to hire a credit repair company to help you out.

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