No person can build excellent credit overnight. However, there are a few strategies that can be used in order to build credit relatively quickly. One of the fastest ways to build credit is to remain intentional about the ways in which you approach a credit account. Furthermore, you can start focusing on building a positive payment history in order to avoid any credit mistakes. While there might be some lucky few who fall in a situation that helps them raise their credit score fast, the bottom line for most is that building credit takes discipline and time. If you are thinking of how to build credit fast, it typically takes at least six months before having a good credit score. Remember a credit scoring algorithm requires you to have at least one single account active for a period of three to six months before it can generate any score for you. Here in this blog, we would be discussing the best ways by which you can build your credit history fast. Read on to know more.
Five Key Factors That Might Effect Your Credit Score
Before we start discussing the ways of how to build credit fast, it is important to know about all those factors that go into determining your actual credit score. Here we have listed five key factors that might affect your overall credit score.
- Credit Usage: Credit utilization or credit usage is a key factor when it comes to your credit score. Credit usage determines how much of your available credit you tap into at one point in time. According to the experts, credit usage should always be less than thirty percent.
- Payment History: Payment history contributes to the biggest chunk of your overall credit score. It is very much important to opt for a one-time payment every month if possible. Remember late payments can cause damage to your credit score for around seven years.
- Credit Mix: Credit mix might also cause an impact on your credit score. Credit mix generally looks at the types of credit that you borrow. A lender might opt to see how well you balance between revolving credits like credit cards and other instalment accounts including student loans, mortgages, personal loans, or auto loans.
- Length Of Credit History: Credit history length will also impact your overall credit. This includes both old and new credit card accounts as well as the age of other credit accounts. The older your credit history, the better. This is mostly because it shows your lenders that you have experience in managing credits.
- Recent Credit: Your recent credit might also create an impact on your credit score. Recent credit generally keeps track of all the applications that you file especially that of personal loans, credit cards, or hard enquiries.
How To Build Credit Fast: The Best Ways
- Paying All Credit Bills On Time: Timely payment of all your credit-related bills is one of the best ways to answer your question about how to build credit fast. By paying all credit bills on time we don’t mean that you need to pay off the whole amount at once. All you need to do is to clear off the minimum due payment every month. Remember even one single late payment might affect your overall credit history.
- Try Getting A Loan With The Help Of A Co-Signer: One of the easiest ways to build fast credit is by opening a loan account with a co-signer who has a previous record of great credit. A co-signer is a person who agrees to be responsible for a loan especially if you stop paying your bills for any reason. In most cases, lenders approve a loan for people with bad or no credit if a creditworthy co-signer is included in their application. If you want this to work for you, you need somebody who has great credit themselves and someone who can trust you to put their credit ratings on the line especially for your loan.
- Try To Cut Down On Any Hard Enquiries: Whenever you apply for any new credit line, your credit report gets pulled. In the financial world, this is termed as a hard inquiry. Hard inquiries often hamper your overall credit line. In case your goal is to see progress in your credit score, try to cut down your habit of enquiring about new loans or credit cards. It is always a great idea to stop applying for any credit lines or even store cards. Remember each and every time you are doing so, it causes a problem in your credit score.
- Always Balance Your Credit Portfolio: Another splendid way to inch the gap between your credit history is by managing all your credit-related accounts carefully. This mainly includes limiting all your consumer credit accounts such as credit cards, store lines of credit, credit cards, etc. Most of the credit bureaus such as Equifax or TransUnion generally look after a nicely balanced credit history that comprises a balance between mortgages, loans, consumer debts, student loans, etc. A common mistake made by most Americans is by opening a long list of consumer accounts. If you have a long list of consumer accounts, try closing down the less relevant ones.
- Try To Use Your Credit Cards Responsibly: Using one single credit card is a tried and tested method that is being used by most consumers all across the globe. Always select a single card and use it for all the expenses that you usually pay with cash or with the help of a debit card. Also make sure, that by the end of the month, all your credit-related debts are paid off. If you are thinking of how to build credit fast, then you need to have something or the other that can be reported every month. This method can help in creating a balance between all your credit expenses.
Apart from all of these, another great way to build your credit history fast is by making use of home rents. At Credit Rent Boost, we work hand in hand with homeowners and tenants by helping them report their rent payments with credit bureaus. With us, you can always stay assured that all your financial and personal details are safe. In case you wish to know more about us, don’t forget to have a glance at our website.