Building credit fast is a challenge for many people, especially if you're starting from scratch or have poor or no credit history. It's a long and tedious process but essential to your future financial security. A good credit score is important for many financial objectives, such as renting an apartment, purchasing a car, getting a loan, or even getting a mobile phone contract.
It takes time to establish credit, but with some clever tactics you can accelerate it. Here are some ways you can build credit fast and improve your score.
1. Make all payments on time.
It's more than a convenience issue: on-time payment of your bills is the single biggest factor that impacts your credit score. A big mistake can be paying late on your debts. This could affect your score forever.
2. Avoid having high credit card balances.
Keep your credit utilization rate as low as you can. This is the percentage that you are using of your available credit on revolving credit accounts such as credit cards or lines of credit. Having a credit utilization ratio above 30% can negatively impact your credit score.
3. Request a higher limit on your credit card.
You might be eligible for a larger credit line if your payments are always on time and you're loyal to the company. Before requesting a credit line increase, check the policy of your card. Some issuers perform a credit inquiry, which can temporarily reduce your credit score.
4. Secured credit cards can help you build your credit more quickly.
A secured card is a great way to establish credit quickly and build a good payment history if you are new to credit. Secured cards often offer a lower credit limit and a refundable security bond in exchange. After a few months of responsible usage, your secured credit card can be traded in for an unsecured one.
5. Credit agencies offer a variety of free services and tools.
You can establish your credit using many free resources, such as websites that help you obtain free copies of credit reports from Equifax, Experian, and TransUnion. You can use credit agency services for disputing inaccurate information and getting your scores fixed.
6. Your credit report should be cleaned up to remove any errors, such as late payments.
It's no secret that mistakes on your credit report can be a huge detriment to your score, and it's easy for them to go unnoticed and undisclosed. To avoid this, it is important to review your credit report for any errors. If you find any, file a dispute and have them rectified.
The immediate impact of correcting any errors in your credit report or missing information can be positive. Depending on the number of errors and your overall credit profile, disputes can be the fastest way to improve your score, potentially increasing it by 100 points or more.