Many people find it difficult to build credit quickly, especially if they are starting from zero or have a poor credit history. It's a long and tedious process but essential to your future financial security. Good credit is essential for many financial goals. This includes renting an apartment or car, getting a mortgage, and even signing up for a cell phone plan.
You can speed up the process by using smart tactics. Here are a few of the best and fastest ways to build your credit.
1. Make every payment on time.
Paying your bills on-time is not only a matter for convenience. It is also the most important factor in determining your credit score. Your credit score can be negatively affected for years if you pay late.
2. Avoid having high credit card balances.
Credit utilization ratio should be kept as low a possible. It is the percentage you use of your available credit for revolving debts, such as lines of credits and credit cards. A credit utilization ratio over 30% can affect your credit rating.
3. A higher credit limit can be requested from your card issuer.
You may be able to get a higher credit line if you're a loyal customer and have been consistently paying your bills on time. You should check your card policy before asking for an increase. Some cards will make a hard inquiry into your credit report, which could temporarily lower the score.
4. Secured credit cards can help you build your credit more quickly.
If you're a first-time credit user, a protected card can make it easy to build credit and establish an excellent payment record. Secured credit cards usually offer a small credit limit in exchange for a refundable security deposit. After a period of responsible use, you can often trade in your secured card for an unsecured one.
5. Use the tools and services that credit agencies provide for free.
There are many resources that you can use to establish your own credit. This includes websites where you can request free copies your credit reports, from Equifax Experian TransUnion. You can also use credit agency services to dispute inaccurate information and get your scores repaired.
6. You can clean up your credit history by removing late payments and other errors
It's no secret that mistakes on your credit report can be a huge detriment to your score, and it's easy for them to go unnoticed and undisclosed. To avoid this, it is important to review your credit report for any errors. If you find any, file a dispute and have them rectified.
You can improve your credit immediately by taking action to correct errors and missing information in your credit report. If you are able to resolve the errors quickly, your credit score can improve by as much as 100 points.