Around 30% of Americans had poor or bad credit, and you may be one of them. Because it’s not a static thing, this means you stand a chance to improve it and get in good standing.
But for now, things may be more challenging since it’s difficult getting approval for things like loans and mortgages. And even if you do get approval, it comes with a price of high interest rates.
If you have bad credit and want to fix it so you can move on with some milestones, read on to find out how to build credit fast.
Get a Secured Credit Card
If you’re having trouble getting a regular credit card, consider applying for a secured one. It’s easy to get approval for these credit cards, which make them a great choice for building credit. If you get approved, put small purchases on them and make payments on time to raise your credit score.
While rules might be less stringent for secured credit cards, there’s still the small possibility your application may get rejected. If that happens, try searching some more, as there are some companies that don’t perform credit checks. Always make sure to read the terms and conditions carefully to ensure you aren’t getting trapped into more debt that you can’t get out of.
Use Someone Else’s Credit to Boost Yours
It’s possible to piggyback on someone else’s credit to boost your own. There are two ways to go about this: become an authorized user on someone else’s credit card, or become a co-signer.
When you’re an authorized user on another person’s credit card, you get to use their credit line and add to your credit history. However, this means whatever you do impacts them, so be very careful not to miss payments or go over the credit line.
Becoming a co-signer is a similar concept. You essentially take out a loan together, so if there are any missed payments, both of your credit scores get penalized.
Take out Personal Loans to Consolidate Debt
Personal loans can be beneficial in lowering the amount you owe. It sounds counter-intuitive, but it works in the long run if you’re responsible.
The concept is that you take out a personal loan that you can qualify for. Then, you take the borrowed money and allocate it towards your biggest debts so you can pay off as much as possible. Ideally, you want to focus on paying off entire balances so you can reduce your debt to just one or two credit cards or loans.
Once you’ve used up all your loan money to pay off balances, you can then put your attention towards repaying that loan and the few credit lines you have open still.
Keep Your Balances as Low as Possible
Your credit is penalized if you are close to your limit. For instance, if your maximum credit is $3,000 and you’ve put $2,900 on that credit card, your credit score may be lower than it could be. This is because high credit utilization is a sign of financial irresponsibility.
Sometimes, it may be necessary to use up close to the maximum credit you have. To improve your situation, here are a few ways to keep your balances low.
Make Multiple Payments in a Month
If you’re bad with your paychecks and tend to blow it all at once on something that’s frivolous, you might have a hard time saving up to make the minimum payment at the end of the month. What you should do is set aside a certain amount each paycheck so not only do you pay the minimum, but also more of your balance.
For example, if you’re paid every other week and your minimum payment each month for a credit card is $300, maybe set aside $200 from each paycheck so you can pay a total of $400 monthly.
Ask for a Credit Increase
If you’re near hitting your credit limit, consider asking the lender for a credit increase. Should they agree to increase the cap, don’t take it as free license to spend more.
Instead, keep employing the tactics we’ve discussed to lower your balance as much as possible. That way, you won’t send yourself into a vicious cycle where you spend a lot, hit the credit limit, ask for an increase, and repeat.
Look for Errors in Your Credit Report
Experian, Equifax, and TransUnion all offer a free credit report every 12 months, so take advantage of this. Every year, take a good look at every item in your credit report; there’s a chance something’s been reported erroneously or shouldn’t be on your report anymore.
If you find anything inaccurate on your credit report, you can file a dispute to have it corrected. Once it’s fixed, you should see an improvement in your credit score.
Make All Your Payments on Time
The key thing to raising your credit score is to make payments on time. While you won’t see instant results, as long as you’re consistent in making your minimum monthly payments, your credit score will steadily rise.
How to Build Credit Fast Simplified!
Knowing how to build credit fast is just one part of the equation; the second is keeping it in good standing. Once you’ve worked hard to fix your credit, make sure you maintain your good habits and preserve your good score. Remember, all it takes is one slipup for it to drop, so keep good track of all your bills and pay them on time!
If you’re having trouble paying bills and managing your paychecks, then check out our money-saving section for some tips.