Financial Management: How to Build Credit Fast
Around 53 percent of Americans are turned down for a loan, credit card, or auto due to bad credit. Credit scores show how responsible you are when it comes to managing your money and repaying your debt—they give lenders a snapshot of your financial health.
Wondering how to build credit fast? You can build credit fast with proper financial planning and using the right financial products with smart credit use. Keep learning to learn how you can improve your score and build credit, so you don’t have to worry about being turned down for a loan due to bad credit.
Use Credit Cards
If you have a credit card, try adding another card and using that responsibly as well. One of the biggest credit card tips is to pay off your balance each month. When you apply for another card, your score may go down slightly, but having more on your credit line increases your utilization rate, which is a factor that determines your score.
If you don’t have a card, you can try applying for a store card. You will probably be limited to using the card in that store, but they are easier to get to help you start building credit.
However, you should avoid a bad credit score by not applying for too many accounts at once. Pick and choose one or two cards and don’t open too many accounts because that could actually hurt your credit score.
After you learn how to use a credit card responsibly, you can also ask for a credit increase on an existing card, which also improves your utilization rate to boost your score.
Become an Authorized User
If you have a family member or friend with a high-limit credit card that pays regularly and on time, ask to be an authorized user even if you don’t use the card. This will appear on your credit report and will help with your utilization. You will also benefit from the person’s positive, on-time payment history, and you don’t even need to have a card or use it.
Add Bills to Your Credit Report
You can add some of your regular bills like utilities and rent added to your credit report. You do this through third parties, and you will have to pay a fee. Each company charges a different amount, but showing you pay these bills on time will help your credit score.
Pay Balances on Time
The best way to improve your score is to pay on time. If you miss a payment by more than 30 days, you should immediately contact your creditor. Pay as soon as you can so the creditor doesn’t contact the credit bureau.
Why is this so important? A late payment stays on your credit report for about seven and a half years! So, it is vital you pay your bills on time!
How to Build Credit Fast Responsibly
Once you know how to build credit fast, you can get a credit card and use it responsibly. Ask to become an authorized user on a family account. Most importantly, make sure you pay off your balances on time.
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