How to Build Credit Fast

To build credit fast, you should apply for a secured credit card or a credit-builder loan and pay the monthly bills on time. You can also become an authorized user on a friend’s or family member’s credit card account, or have your rent and utility bills reported to the credit bureaus. Additionally, it’s a good idea to keep your credit utilization low and avoid applying for too many credit card offers at once.

It doesn’t take long to build credit, at least in the sense of building enough credit history for a credit score to be generated. You may be able to get your VantageScore credit score with as little as one month’s worth of credit history. Building a consistently excellent credit score is a multi-year process, however, and there are no shortcuts. You can keep track of your progress with free daily credit score updates from WalletHub.

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1. Become an Authorized User

Asking a financially responsible family member to make you an authorized user on their credit card account is a great way to build credit when you’re too young to qualify for your own account. It can also help you supercharge your credit-building efforts when you’re older.

Basically, you’ll be piggybacking on the primary accountholder’s established credit standing. Their spending limit will inflate your available credit, and their on-time payments will add positive information to your credit reports on a monthly basis, as long as those payments are on time.

Plus, authorized users aren’t responsible for unpaid bills or any misuse of the account. You can easily get negative records about an account you were an authorized user on removed from your credit report by asking the credit bureau to do so.

Learn more about being an authorized user.

2. Get Your Own Credit Card

Credit cards are the best credit-building tools available to us. They report account activity to the major credit bureaus on a monthly basis, which allows cardholders to build a track record of responsibility.

You don’t even have to make purchases to build credit with a credit card if you don’t trust yourself not to overspend. Simply having an open credit card with no balance will result in credit-score improvement. Just bear in mind that the issuer could close your account after a prolonged period of inactivity, and that could hurt your credit standing if it’s the oldest account on your credit report.

So, even if you have to place a refundable security deposit on a secured card, it’s essential to get yourself some plastic as soon as possible. The only time you should think twice about doing so is if you plan on applying for a mortgage or auto loan in the next three months. Opening a new credit card causes your credit score to dip temporarily, which could cost you if timed poorly.

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3. Apply for a Credit-Builder Loan

A credit-builder loan is a type of loan that allows people to build their credit without any risk to the lender. When you have a credit-builder loan, the lender holds the money you are borrowing while you make payments on the loan, and it reports your account information to the credit bureaus every month. You can only access the funds when the loan is paid off.

Credit-builder loans are designed to help you build credit by giving you an opportunity to demonstrate that you can handle making monthly payments on time. In fact, a Consumer Financial Protection Bureau study found that consumers without debt who opened a credit-builder loan increased their likelihood of getting a credit score by 24%.

Learn more about credit-builder loans.

4. Report Your Rent to the Credit Bureaus

You can build credit for something that you already do every month. Unlike a mortgage, rent payments are not typically reported to the credit bureaus. If your landlord does not report your rent payments to the credit bureaus, you can sign up for services such as Experian Boost and Self that can help ensure information about your rent payments is relayed to the credit bureaus.

Having your on-time rent payments reported can help build your credit faster. For instance, Experian states that most people’s credit scores instantly increase by an average of 13 points when they add these payments.

5. Report Your Utility Payments to the Credit Bureaus

Just like rent payments, your utility payments are not automatically reported to the credit bureaus. So, if you pay your bills on time every month, you could be missing out on the opportunity to build your credit. Luckily, there are services such as WalletHub that will report your utility payments to the credit bureaus.

With WalletHub’s phone and utility bill reporting, you can start building credit with just two consecutive payments from the same service provider. When you are a premium user, enable the credit builder feature, and sync a checking account, WalletHub will automatically report eligible phone, electricity, gas, and water bill payments to TransUnion.

6. Pay Your Bills on Time

Payment history is the greatest factor affecting your credit score. So, always making on-time payments, especially when you are just starting your credit history, can help you build good credit quickly. You can set up autopay and create payment reminders to help ensure you never miss a payment.

Learn more tips for never missing a due date.

7. Keep Your Credit Utilization Low

Your credit utilization ratio is the amount of credit you are using compared to your credit limit. You should try to keep your credit utilization ratio below 30% to help your credit score, though the lower you can get your utilization, the better it is for your credit.

Some things you can do to keep your credit utilization low include:

Keep your spending under control.

Spending only what you can afford to repay in full each month encourages you to keep your credit utilization low. You can help control spending by creating a budget and sticking to it. You can also sign up for a WalletHub account, where you can set spending limits, and WalletHub will notify you when you are approaching those limits.

Request a higher credit limit.

A higher credit limit can improve your credit utilization ratio and thus your credit score. You just need to make sure you don’t spend more because of it.

You should be aware that most lenders will not increase your limit until you’ve made at least six consecutive on-time payments. It’s also important to note that your creditor may have to recheck your credit to evaluate your request for a higher limit. That may result in a hard inquiry on your credit report, which could temporarily ding your score a few points.

Pay your credit card bill multiple times a month.

Your credit utilization is calculated using the balance on your monthly credit card statement. So, if you pay part of your balance before the statement date, your credit utilization will be low since it will be based on a smaller balance. Then, you can pay again before your actual due date to make sure you maintain a low balance throughout the month and your account stays in good standing.

Learn more about how to keep a low credit utilization.

8. Limit Credit Inquiries

You’ll get a hard inquiry placed on your credit report pretty much every time you apply for new credit. A hard inquiry can temporarily lower your credit score by around five points. However, when you have multiple credit inquiries within a short amount of time, your credit score can drop even further. That’s why it’s important to limit the number of times you apply for new credit within a short period – to prevent your credit from suffering.

This doesn’t apply when you are rate-shopping for an auto loan, student loan, or mortgage. Multiple inquiries for these types of loans made within a 14- to 45-day period will count as a single inquiry.

9. Check Your Credit Regularly

Fluctuations in your credit can occur daily. That's why you should check your credit report and score regularly to see how certain actions you take affect your credit score. WalletHub offers free credit scores and credit reports that update every day. WalletHub also offers personalized credit analysis that can tell you which areas to work on to build your credit.

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You can also use WalletHub’s credit score simulator to see how certain credit decisions will affect your score. This can help you determine what to do for the quickest gains.

Not-So-Fast Credit Building Tips

As you sprint toward Top WalletFitness®, make sure not to get so caught up in short-term gains that you lose sight of the bigger picture. Your goal should be to not only get excellent credit but also keep it. Taking the following tips to heart will help.

Be Patient

The length of your credit history accounts for about 15% of your overall credit score. That’s significant, but it shouldn’t force you to play the waiting game. It’s possible to build a good or excellent credit score in a matter of months, after all.

So, focus on the factors that make up the remaining 85% of your score, such as payment history and credit utilization. If you concentrate on what you can control, time will take care of itself.

Add to Your Credit Mix

The types of credit that you’ve used — credit cards, auto loans, and mortgages, for example — account for at least 10% of your credit score. It usually takes young people a while to score highly in this regard, considering that 40 is the median age for a first-time homebuyer. But that’s all right.

It’s certainly possible to build excellent credit before buying a house or a car. And the goal is to prove yourself capable of borrowing responsibly with different types of financial products, not to make mistakes in haste.

Finally, it’s important to acknowledge that not everyone is building credit from scratch. If you’re working your way back from damaged credit, make sure to check out WalletHub’s tips on how to rebuild your credit and the steps you can take to speed things up.

For more great advice, check out WalletHub’s overall credit-improvement tips.

Ask the Experts: Making Good Credit Time

For more insight into the credit-building timeline and what you can do to speed it up, we asked a panel of personal finance experts to share their thoughts on the following questions. See who they are and what they had to say, below.

• Are there any legitimate ways to speed up the credit-building process?
• Does good credit only come to those who wait?
• What is the biggest mistake that people make when trying to build credit fast?