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Building Credit Fast: How to Build Credit ASAP

by Josh Biggs in Finance on 11th August 2019

A good credit score is anything above 670; obviously, the higher your score is, the better rates you can get on things like mortgages and other types of loans. If you don’t have a credit score of over 670 and are considering making a significant purchase soon, you may be wondering about how to raise your credit score to get the best rates possible.

Here are some tips for building credit fast.

Sign up for Credits Cards If You Don’t Have Any

If you’ve been paying for everything on your debit card, this takes money directly from your account and doesn’t use any credit. While this may seem like a very responsible thing to do, it barely builds up any credit.

When it comes to no credit vs bad credit, there are some key differences, but this is the bottom line: you don’t have good credit, period. This can cause lenders to avoid loaning money to you since you don’t have a history of responsibility with money.

If you’re currently a student, then you should take advantage of starter credit cards many financial institutions offer. It can be difficult getting approved for credit cards if you don’t have any credit, so take any opportunities that present themselves to you, provided they have good terms.

With a starter credit card, you can put small purchases on them and pay off the balance regularly to build up your credit.

Put Regular Expenses on Your Credit Cards

Everyone has regular expenses, such as groceries, gas, and rent. If you have a nice balance in your bank account, or you have a steady and reliable paycheck, consider putting these expenses on your credit cards and paying them off straightaway with your bank balance.

Your credit score is dependent on how dependable and trustworthy you are when it comes to paying your bills. If you can put regular purchases on your credit card and show that you’re responsible with your money, your credit score will rise. This can come with some perks, such as lower interest rates and higher credit lines.

Don’t Be Late on Any Payments

With that said, make sure you’re absolutely punctual when it comes to paying your bills on time. This can include your credit cards, any existing loans, and utility bills. While you won’t get a positive change in your credit score for paying things like utility bills on time, it can go down if you don’t pay and the company sends your bills to debt collectors.

If you miss just one payment, or are late, this can significantly impact your credit score. Make sure you keep track of every bill and their due dates so you don’t risk this happening. Once your credit score drops, it takes a lot of effort to raise it again.

Don’t Max out Your Current Credit Lines

If you already have some open lines of credit, you’ll have to keep an eye on how much of them you use. The higher your credit utilization, the worse it is for you.

For example, if you have a credit limit of $6,000 and you’ve used up $5,500 of it, your credit score will be lower than if you’d only used up $2,000 of the credit line. This is because the more credit utilization you have, the higher the possibility that you’re irresponsible with your finances.

How to Keep Your Balance Low

A good way to keep your credit utilization low is to keep paying off your balance throughout the month whenever you can. You can also ask for a credit line increase so the ceiling becomes higher. However, this can become a slippery slope where you just keep spending more and more.

Another option is to either focus on the credit card with the highest debt or to spread that amount across other cards. With the first option, you’d pay the minimum monthly except for the card with the highest balance; you’d put in more. With the second option, you’d pay off portions of the highest debt with your other credit cards so instead of having $5,000 on one card, you have a couple thousand on a few.

Check for Errors on Your Credit Reports

While credit bureaus strive to have accurate information on you, mistakes do happen. When they do, they can have a negative impact on your credit score.

To prevent this from occurring, you need to check your scores regularly. You can request free reports every year from TransUnion, Experian, and Equifax.

Go through your reports and look for things such as inaccurate reports (payments you made on time reported as late) and outdated information that needs to be removed. If you find any, then you’ll need to dispute these lines. Once those errors are fixed, you should see your credit score improve.

Make sure this isn’t just a one-off thing. You need to check your credit reports every year to ensure all the information is accurate and up-to-date. This can only help your credit score.

Building Credit Fast Can Speed up Your Life Plans

By focusing on your credit, you’ll see new opportunities present themselves to you in no time. If you thought buying a home or purchasing a new car was out of reach before, then think again.

With our tips on building credit fast, you’ll get your life on the fast track to success and happiness. Plus, you’ll ensure your credit reports are accurate to avoid trouble further down the line.

For more articles about handing your money and credit, keep tabs on our finance section.

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