Money

How Fast Can You Build Credit?

Last updated on April 6, 2021 by

credit score

Building a credit score doesn’t take much time if you’re consistent with payments and don’t damage your credit utilization ratio.

Recent data shows that the average person can increase their credit score by 25 points within three months and 70 points within 12 months. It takes about six months to develop a strong FICO score.

There are faster ways to build a good credit score. It can take as little as 1-2 months with a few simple strategies, like making payments on time, using Experian Boost, and getting a credit builder loan.

You won’t necessarily be eligible for a home loan in that short time, but it is a step towards developing a solid credit report.

FICO scores are the most used brand for building your credit report. About 90% of lenders use FICO credit scores to calculate your creditworthiness. They do this by analyzing your credit and payment history.

You can check out the FICO score simulator here to see how each action you take would affect your credit score.

You can calculate your FICO score. It will help you see what factors could change in your credit report. You can build your credit a lot faster if you know where your credit score is now.

Here we will explore the different ways you can build good credit fast.

Fast Ways to Build Your Credit Score

The easiest and fastest way to start building a good credit score is with secured credit cards. However, that’s not the only way.

It’s better to have a diverse credit portfolio. A credit report with revolving and installment account data will have a higher FICO score than one without.

It’s vital to learn how credit scores work. A greater understanding will help you build a good credit score. Another place that you can get an estimate of your credit score is through Chase Credit Journey if you have a Chase account. Tally is also an excellent app to look in to for help managing your credit cards to improve your credit score.

Let’s look at the various methods you can use.

If You’re New to Credit, Use Experian Boost 

Experian Boost often gives people with no credit or low credit an immediate boost. The reason?

Experian Boost lets you add payment history data from all your accounts – rent, Netflix, utility bills, and the list goes on – to your credit file. Many years ago, this wasn’t possible, and all that potential credit was wasted.

Studies have found that people spend almost a third of their income on rent payments every month. Reporting this to the credit bureau is one of the best ways to build credit fast. According to their website, Experian Boost users saw an instant increase in their credit scores.

They also offer free credit reports and monitoring. Tracking your credit as you build it is important. It helps you see where you must adjust and where you’re doing well.

Pay off Credit Card Debt 

Your credit utilization ratio plays a critical role in your credit score. The ideal range for credit card balances is below 10% and up to 30%.

Anything over that makes it exceedingly difficult to get approved for credit by different credit agencies. You must pay all credit card balances that exceed 50% immediately. It will give you an immediate boost in your credit score.

You can use your business credit cards to build credit fast if you own a company. A good business credit score will impact your eligibility for start-up loans and other investments. Get a business credit report from Experian Boost.

Do regular checks on your various credit card accounts to monitor your available credit and make sure you stay within the happy ratio. Pay all credit card bills on time.

Another crucial tip is to only use your credit card if you have the money to pay it back. Two of the most crucial factors that contribute to your credit score are payment history (35%) and the amount owed (30%).

You will get a bad credit score if you rack up a huge credit card bill that you can’t pay back. Digital Honey has some more points of credit advice on this subject.

Get a Credit Builder Loan

Credit builder loans are another great way to build a good credit score fast. Credit Strong has some of the best loan options available.

You don’t have to have a credit history to get one. Credit Strong says that 10% of their customer base had no credit or payment history when signing up.

Another benefit of a credit builder loan is the savings account they create for you. Every time you make a monthly installment, part of it goes into a savings account.

Those savings are deposited into your personal bank account after paying back the whole loan, which usually takes between 6 and 24 months.

Credit builder loans are a form of installment credit. Using them is a great way to expand your credit profile. It shows lenders that you can make consistent payments and pay off all your debt. Having a diverse credit report is crucial for building credit fast.

You might not want to get a credit builder loan, so use your student loan repayments instead.

Get Credit Cards

You can’t use debit cards to build credit fast, but you can use credit cards.

Credit cards are a good way to diversify your credit report. They are a great example of revolving credit. There are two kinds of credit cards, namely secured and unsecured.

A secure credit card is one you fund yourself, which means you set the limit. If you give your credit card issuer $300 (typically the lowest amount you can deposit) then your limit will be the same amount. Financial institutions and lenders specifically designed secured credit cards for people building credit.

An unsecured credit card works in the opposite way. The credit card company will determine how much your limit is and the interest rate. They also determine if you’re eligible for a credit limit increase.

Asking for an increase is another good way of boosting your credit score. It shows you are consistent with lending and paying back on time.

Unsecured credit cards are a good way to build credit fast but must be used with caution. It’s easy to overspend.

Try to get three new credit cards if you don’t have any. You will automatically get three credit lines, which will help you build credit faster.

Make consistent monthly payments. Use automatic payments to ensure you always pay on time. Making micropayments throughout the month is another good method for building credit fast.

Try to keep your credit utilization ratio below zero. Your credit score will increase by 100 points if you do this for 6 months.

You can also open a credit account with some retailers. It’s a great way to build personal credit if you are refused a credit card from a traditional financial institution.

Another good way is to become an authorized user on someone else’s credit card. You can piggyback off their current payment history. Make sure to find someone with a good credit score and utilization ratio.

Your credit utilization rate plays a big role in your credit score. Use your credit cards if you have them, but also keep any you aren’t using open. You can lower your debt-to-credit ratio and increase your credit history.

Frequently Asked Questions

How long does it take to get a 700-credit score? 

It can take 12 months to build a 700+ credit score from scratch. You can start building towards that score in a month or two.

You will need a lot of patience to get the kind of credit score that allows you to buy a house.

How long does it take to build credit from 0? 

It takes around 30-90 days to build a credit score from a credit bureau. Your actions will influence how fast you increase your credit score.

Get a secured credit card. Take out a credit builder loan.  You can also try applying for a secured loan if you have the collateral to back it up.

Register all the other accounts you currently pay every month with Experian Boost or something similar. Make on-time monthly payments.

These simple steps will have you building a solid credit score fast.

How long does it take to build credit to buy a house? 

A credit score of 680 is required to buy a house on good terms and with low interest rates.

It will take about a year to reach that credit score if you’re starting from the beginning. Try to get a secured credit card or a credit builder loan to generate a credit report quickly.

Do you have to spend a lot of money to build credit? 

No, you don’t.  About $1,000 is a good amount to start with on secured credit cards and credit builder loans.

Build Credit Fast With These Methods

Building a good credit score can take anywhere from one month to a year.

You must make consistent payments to build credit fast.

Get secured credit cards and credit builder loans to diversify your credit report. It will help build your credit score.

Micropayments help keep your credit utilization score below 10%. You will see an immediate increase in your credit score.

You can become an authorized credit card user if you aren’t eligible for one yourself. Your credit score will get an instant boost.

Include all your monthly bills in your credit report using applications like Experian Boost and Rental Kharma.

Be consistent and use these methods to build your credit score. You can build your credit fast if you follow them.