Credit can be a loan or a decrease in the amount due by the borrower for delivered products or services. It is generally granted for personal, business, and government transactions. There are many ways to build credit fast that help you enter into new lines of credit and maintain them over time. Here are tips on how to build credit fast.
1. Pay Bills on Time
Paying your bills on time shows creditors that you can be relied on and have the money to pay back your debt when it’s due. When you consistently pay bills on time, pay off a small portion of your monthly balance, and make it a habit, you will start showing up on many positive lists with credit bureaus instead of negative ones. This will allow you to gain the trust of lenders, landlords, and employers very quickly, and it is the most efficient way on how to build credit.
2. Deal With Collections Accounts
Many people have collections accounts with various creditors. First, settle the collection account as something other than a bad debt or debt that needs payment. If you need help paying the debt, find out what rules apply to your situation and take advantage of the laws regarding this type of debt before taking further action. This may allow you to get this negative mark off your credit report, making you eligible for new lines of credit.
3. Avoid Credit Cards At All Costs
Avoid getting a credit card if you are starting to build your credit. Credit cards are the fastest and easiest way to get into debt, which will ruin your chances of building good credit quickly. Instead, use cash or debit cards and place a small amount of money on them each month.
This will increase your balance, making it good for your credit report. When you apply for a new credit card, you send the information to several lenders. That is a big red flag to them because there is more information in one file than one lender can use on a credit report without negatively impacting others.
4. Get Credit for Rent and Utility Payments
Utility companies and rental agencies can report your payment to credit bureaus. This is another easy way how to build good credit quickly. Sign up for your utility company with auto-pay and pay on time, or get a rental agency that reports to the credit bureaus. If you already rent, consider getting a landline from your service provider, as this will also add some positive information to your credit report.
Also, look into secured credit cards for utility and rental payments, allowing you to keep the funds on your card and use the debit card for the rental payment. This will be accepted in most circumstances and be a positive mark with credit bureaus.
Building credit for a new account is a challenging process. The more you keep your accounts open, the easier it will be to build credit quickly. It is important to pay bills on time and save as many active lines of credit open as possible so that it does not show as delinquent on any of them.
