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Build Your Credit Fast: 20+ Best Ways With or Without Credit Card

by: Sean Michaels

Update: 10/2019

 

How to Build Credit Fast

Page Contents

Ways to Build Credit Fast

Lots of people want to know how to build credit fast. That makes sense. After all, credit scores are an incredibly important part of modern life. They’re used for everything from decisions about loans and lines of credit to employment and rental approval.

This article will help you understand how to build credit quickly. We’ll cover the basics of a credit score. Then we’ll explain how to build your credit. Finally, we’ll answer the most common questions people have about building their credit score quickly.

Use the information in this article to get a better understanding of how credit works. You should also use the information in this article to make informed financial decisions to improve your credit score fast.

What is a Credit Score?

A credit score is a numerical representation of how you handle credit and loans. Lenders use it to see how likely you are to default on a loan or miss a payment. They use that information to determine whether or not to approve you for loans and lines of credit. They also use it to help set the interest rates you get on those products.

We’ll look at each of the parts of a credit score below. That will help you understand how the different parts go together. It will also help you understand how you can improve your credit score quickly.

There are five main parts of a credit score. They are:

  • Payment History (35%)
  • Credit Utilization (30%)
  • Length of Credit History (15%)
  • Credit Mix (10%)
  • New Credit (10%)

Payment History

The first and biggest part of a credit score is your payment history. This is the record of on-time, late, and missed payments that your various creditors and lenders report to the credit reporting agencies. Payment history makes up 35% of your credit score.

You build credit with a history of on-time payments. If you miss a payment or are late, then your credit score will go down. It’s important to understand what it means to be late on a payment for credit purposes. Everyone has a mental slip sometimes and forgets to pay a bill. A late payment only counts against your credit when it is 30 days late or more. Just because a company charges you a late fee doesn’t mean that it will report the payment as late to the credit reporting agencies.

How to Build Credit Fast

Credit Utilization

The next largest factor is credit utilization. This aspect makes up 30% of your credit score. It’s also the easiest one to work on if you’re trying to raise your credit score quickly. We talk more about this and how to raise credit score numbers in another article but here is the gist of it.

Credit utilization looks at the total amount of revolving credit you have. It then compares that to how much you’re using. Revolving credit is a credit product that you can use, repay, and then use again. Credit cards are the biggest example of revolving credit. However, certain home-based lines of credit, like a HELOC, are also revolving credit.

Credit utilization looks at your total credit limit. That means if you have 2 credit cards with a $5,000 limit, you have $10,000 in credit. If each card has a $2,000 balance, then you’re using 40% of your available credit.

The less available credit you’re using, the better your score will be. Carrying a high balance on your cards shows creditors that you’re having money problems. If your cards are maxed out and you can’t pay them down, then that tells lenders that you’re at a high risk for default on new loans and credit.

Average Length of Credit History

The next factor is the average length of your credit history. This factor makes up 15% of your credit score. The longer the average length of your credit history, the better your credit score will be.

This factor matters because the longer the records that credit reporting agencies have, the more information they have about you. That allows them to make more accurate predictions about your ability to handle loans and credit products.

This factor is also the hardest for people looking to build their credit fast. We’ll cover how to quickly establish a credit history in a moment.

Credit Mix

Credit mix is the next thing that shapes your credit score. It contributes about 10% to your score. That’s not a huge factor, but it can be important.

Your credit mix looks at the different types of credit and loan products you have. Lenders like to see that people are able to handle different types of credit and loans. That means having a good mix of installment debt and revolving credit. The better your mix of these different types of products, the better your score will be.

New Credit

Finally, new credit makes up 10% of your score. People call new credit lots of different things, including inquiries, checks, and pulls. These are all the same thing.

There are two types of checks: hard checks and soft checks. A hard check is the type of inquiry you get when you actually apply for credit or a loan. It signals that you’re serious about looking for new financial products. These are the kinds of checks that lower your score. They don’t have a huge impact, but they do matter.

One thing that’s important to note about hard checks is grouping. The credit reporting agencies realize that it’s a good idea to shop around for the best deal. That means if you apply for the same type of credit or loan with multiple companies your credit score will treat that as one inquiry. This allows you to find the best rates and offers on your products without doing extensive damage to your score.

The other kind of credit check is a soft check. This is used for things like credit monitoring and other administrative purposes. It’s also used when you’re going through a pre-approval process. It doesn’t affect your score at all.

How to Build Credit Fast

How You Build Credit

Now that you understand how credit scores work, you’ll want to know how to build credit. There are a few easy ways to start building credit fast.

The first option is to become an authorized user on someone else’s account. This will allow their credit history to be transferred to you for that account. It’s a great way to quickly build credit. Just make sure that the account has a good record of on-time payments so the credit you build is good.

The next option is to apply for easier to obtain credit cards. These include things like store cards and starter or student credit cards. These cards will have a low limit. However, as long as you make your payments on time, you’ll start to quickly build your credit history.

A secured credit card is another great way to build your credit. You give the card issuer a certain amount of money, usually between $200 and $5,000. That deposit becomes your credit limit. Then you use the card and pay it off just like any other credit card. This allows you to quickly build your credit.

The last option is to use easy to get loans. These include things like student loans and short-term loans. Make sure you don’t sign up for predatory loans or loans with high interest rates. Also make sure you’ll be able to make your monthly payments and pay the loan back on time or ahead of time to build up a good credit history.

FAQ on General Credit Building

This section covers the basics about building credit. It answers all the general questions you have about how to build credit. Use this information to get a good foundation in building credit. Then you can explore the other FAQ sections to get answers to your specific questions.

How to Start Building Credit?

You can start building credit by becoming an authorized user, getting a secured credit card, getting a store card, student loan, or other easy to get credit product. No matter what method you use, the FICO scoring system can’t create a score for you unless you have 6 months of payment records.

How to Build Business Credit?

Building business credit requires that you get an EIN and a checking account in your business’s name. You’ll have to register as a business and then you can start applying for business credit.

What is the Best Way to Build Credit?

The best way to build credit is different for everyone. It depends on your needs, goals, and situation. Review the options we’ve listed above to determine the best way to build credit for you. However, it’s important to keep in mind that credit reporting agencies need at least 6 months of information to produce a score for you.

How to Build Credit Without a Credit Card?

The best way to build credit without a credit card is to use a store card. You can also become an authorized user on someone else’s account. Finally, you can use student loans and other small loans to establish credit history.

How to Build Credit History?

It takes time to build credit history. Companies only report to scoring agencies once a month. You can build credit history with secured credit cards and other products. Becoming an authorized user on someone else’s account is another good way to build credit history. Especially if you can be added to multiple accounts. Just keep in mind that FICO needs 6 months of records to generate a score for you.

How Can I Quickly Raise My Credit Score?

The best way to quickly raise your credit score is by lowering your credit utilization. You can do this by paying down your credit card balance. You can also do this by becoming an authorized user on someone else’s account.

What Things Build Credit

Lots of people wonder if different things will help build credit. This section has the answers to all the questions you have about if something builds credit.

What Builds Credit?

Any revolving credit product, loan, or service that reports to the major credit reporting agencies will build credit. That means utility bills, rent, and more could help you out. That’s in addition to things like credit cards and loans.

What Bills Help Build Credit?

It depends on who reports to the credit reporting agencies. Some companies report and some don’t. Credit cards and loans always report. However, utility bills and landlords may or may not. You’ll need to check with the companies that you pay to find out if they report. You can also use a free credit monitoring service to find out if your bills are being reported.

Does Paying Rent Build Credit?

Sometimes. If your landlord reports your payments to the credit monitoring agencies, then it will help build credit. You can always request that your landlord report your payments to build credit. They may or may not be willing to do so, but asking never hurts.

Do Authorized Users Build Credit?

Yes, being added as an authorized user will build credit. It increases your credit limit which lowers your utilization. It also establishes a credit history. That’s why becoming an authorized user is one of the most common ways for people to repair their credit after their score has taken a hit.

Do Secured Credit Cards Build Credit?

Yes, secured credit cards report payments to the major credit reporting agencies. That means paying your bill for a secured credit card will help build credit.

Do Student Loans Build Credit?

Yes, as long as you’re making payments on them. Student loan companies are required to report to the major credit reporting agencies. That includes completed payments and missed or late payments.

Does Financing a Phone Build Credit?

It depends. If the company you’re financing the phone with reports your payments, then it will help build credit. You’ll need to check with the specific company for more information.

Does Leasing an Apartment Build Credit?

It can. You’ll need to check with your landlord or property rental agency to find out if they report payments. If they do, then leasing an apartment will help you build credit.

Does Paypal Credit Build Credit?

No. Paypal doesn’t report to the credit reporting agencies. That’s true for Paypal accounts and Paypal’s credit features. Paypal cards that are issued by banks or credit card issuers may report. You’ll have to check on the specific product you’re using for more information.

Does Cosigning Build Credit?

Yes, when you cosign something your name is added to the account. As a result, completed, late, or missed payments will affect your credit score. You should make sure that anyone you co-sign with will make their payments on time, or your credit history will take a hit.

Does Paying Bills Build Credit?

Usually. It depends on what the bills are and if the companies that you’re paying report your payments to the credit reporting bureaus. Certain things, like credit cards and loans, always report and so will build credit.

Does Paying Health Insurance Build Credit?

It could. You’ll need to check with your health insurance company to see if they report your payments. Paying health insurance only builds credit if the company reports.

Can Prepaid Credit Cards Help Build Credit?

Pre-paid cards do not build credit. However, secured credit cards do. Pre-paid cards are more like universal gift cards. You don’t make payments on them, so they don’t build credit.

Does Paying Off a Personal Loan Build Credit?

Making payments on a personal loan builds credit. However, if you just pay the loan off then you won’t show a record of consistent payments, so you won’t be building credit. That means it’s better to just make your monthly payments if you’re trying to establish a credit history.

Does Leasing a Car Build Credit?

If the company you’re leasing from reports your payments, then leasing a car will build credit history. You’ll need to check with your specific company for more information. However, most car dealerships and leasing agents will report your payments.

Credit Building Timeframe

Many people looking to build credit want to know how quickly they can do so. This section answers your questions about the speed of building credit.

How to Build Credit Fast?

It’s hard to build credit fast. Companies only report once a month. Getting added as an authorized user is probably the fastest way to build a credit history.

How to Build Credit Fast

How Fast Can You Raise Your Credit Score?

If you’re wondering how to repair credit or raise your score just know it depends on lots of different factors. Everyone’s credit score is different. Also, credit scores are very complex. A credit repair company or financial planner can help you understand your specific situation.

What’s the Fastest Way to Build Credit?

The fastest way to build credit is to be added as an authorized user on someone else’s accounts. That allows their record of payments to be factored in to your credit score. Keep in mind that it will take 6 months of records before the credit reporting agencies will be able to produce a FICO score for you.

How Long Does It Take to Build Credit?

It generally takes at least 6 months to build credit. That’s the amount of information that credit reporting companies need to generate a FICO score for you.

How Long Does It Take to Build Good Credit?

Usually at least 6 months if you’re starting from scratch. However, if you already have a credit history, then there are other ways to boost your score. You’ll need to check with an expert to find out about your specific situation.

How Long Does It Take to Establish Credit to Buy a House?

That depends on several factors. If you don’t have a credit history already, then it will take 6 months to establish a credit score.

How to Build Credit with a Credit Card Fast?

Making on-time payments to your credit card and paying the balance off in full are the best ways to build credit with a credit card.

How Long Does It Take to Get Good Credit from No Credit?

It takes at least 6 months to establish a credit history. The FICO scoring system needs 6 months of information to generate a score for you.

Other Credit Building Questions

Credit is complex, so there are lots of questions that don’t fit neatly into our other categories. We’ll answer those questions here.

How to Build Credit After Bankruptcy?

There are lots of ways to build credit after bankruptcy. Being added as an authorized user and using a secured credit card are the two most common methods people use.

How to Build Credit at 17?

The two best ways to build credit at 17 are to become an authorized user on someone else’s account or to take out a secured credit card if the laws in your state allow you to do so.

How to Build Credit with EIN number?

First you need to get an EIN number, then open a bank account in your business’s name. Once you’ve done that, you can start applying for credit and loan products under your EIN number.

How to Build Credit as a College Student?

Making payments on student loans is a great way to build credit as a college student. You can also get a credit card specifically designed for students and make on time payments.

Why is it Important to Build a Credit History?

Credit history is an important part of your credit score. Your credit score is used for loans and credit products. It can also be used for employment screens and rental approval.

How Can I Raise my Credit Score in 30 days?

The best way to raise your credit score in 30 days is to pay down as much of your credit card balance as you can. That will lower your credit utilization, which makes up 30% of your credit score.

How Can I Build My Credit at 18?

A secured credit card or being added as an authorized user on someone else’s account are the best ways to build up your credit when you’re 18. You can expect to get a credit score 6 months after you first start having information sent to the credit reporting agencies.

Which Credit Card is Best to Build Credit?

A secured credit card is the best credit card to build credit. These cards are easy to get approved for and let you make payments to establish a good credit history.

How Can I Build my Credit if I Have No Credit?

If you have no credit history then a secured credit card is the best way to build credit. They’re easy to get approved for and will report your payments do the major credit reporting agencies.

What Credit Score Does Everyone Start With?

Everyone starts with a different credit score. The FICO scoring system requires 6 months of information before it can produce a score. That means the score you get will be based on your particular information.

What is a Good Credit Score to Start With?

A good credit score to start with is a score in the “good” range of credit scores. The FICO system needs 6 months of information to produce a score. Once you have 6 months of credit history you’ll get a score just like everyone else.

Can You Build Credit with a Debit Card?

No, debit cards are tied to your checking account. Credit reporting agencies and credit scores don’t look at your checking account to determine your credit score.

Do I Have a Credit Score if I’ve Never Had a Credit Card?

Maybe. If you’ve had bills that report payments or a loan for at least 6 months then you’ve got a credit score. Otherwise, probably not. You can use a credit monitoring service to get a free credit report and find out if you have a credit score.

Do Debit Card Overdrafts Affect Your Credit Score?

Not currently. The next FICO system will take overdrafts into account when calculating your score. However, companies may or may not use that system.

Do You Need Credit to Rent an Apartment?

Usually. Many landlords and leasing companies will run a credit check before offering you a lease. However, many don’t. This is usually the case near colleges. Instead, the landlord will ask you how you’re going to pay for the apartment and ask for income verification.

Is No Credit Better than Bad Credit?

Yes. No credit means that you haven’t established a credit history yet. Bad credit means you’ve demonstrated that you’re a risk to default or miss payments.

How Old Do You have to be to Build Credit?

It depends on many factors. Usually you need to be at least 18 to get a credit card or take out a loan. However, if you’re an authorized user, then you can start building credit early.

How to Build Credit Fast After Chapter 7?

A secured credit card and becoming an authorized user are the best ways to quickly build credit after you declare Chapter 7 bankruptcy.

Sean Michaels

Sean brings a decade worth of experience in credit repair to our company. Sean started his career working in an accounting department for a major credit card company. This was a natural fit, given his bachelor’s and master’s degrees in accounting.