Whether you’re a young adult new to the credit world or are simply looking to improve your credit score, you should know that it takes time to build – and rebuild – your credit. So, just how can you build your credit score fast? While you aren’t going to raise it overnight, you can improve your credit score quickly using these three techniques.
3 Ways to Build Your Credit Score Fast
Just how fast you can build your credit score depends on your current credit situation and history. Are you starting from the bottom, or are you just looking to increase your current score? If you’re new to credit, it might take more time before you see substantial improvement compared to someone with a lengthy positive credit history.
Regardless of where you are, there are three different ways you can build your credit score fast:
- Become an authorized user – Becoming an authorized user on someone’s credit card account is a great way to build credit fast. You’re added to their account and get all the benefits of the activity – such as regular monthly payments – and history of the card without actually being responsible.
- Apply for a credit card – You can apply for a traditional credit card, a store credit card, and/or a secured credit card. All three can help you build credit as long as you pay them on time and use them responsibly.
- Take out a personal loan – A personal loan – or even a credit-builder loan – gives you a chance to use installment credit. Additionally, it gives you a chance to make on-time payments on a credit account over a set period of time.
Understanding Your Credit Score
Most lenders base approval on your FICO credit score. Your FICO score is a number that ranges from 300 to 850, and is determined by five different components:
- Payment history (35%) – This is the biggest, and most important, factor in determining your credit score. As long as you pay all your bills on time, you should see your credit score improve over time.
- Amounts owed (30%) – This is the second biggest factor, and includes the amount you owe on all credit accounts and how much debt you currently have. The biggest factor at play here is your credit utilization ratio, or the amount of your credit card balances compared to your limits. It's important to keep your credit card balances low, or it's going to negatively affect your credit score.
- Length of credit history (15%) – The third section includes the length of time you’ve had your credit accounts, how often you’ve used them, and their average age. The longer you’ve had credit (and paid them as agreed), the better off you are in this regard.
- Credit mix (10%) – This factor demonstrates your ability to manage different types of credit such as revolving (credit cards) and installment (loans) credit. Ideally you want a good mix of credit types.
- New credit (10%) – Opening new lines of credit is good for your score, but don’t open too many in a short period of time. Make sure you space them out.
Consider an Auto Loan to Help Build Credit
Did you know there’s a fourth option? If your credit is less than perfect, you can build credit by applying for a bad credit auto loan. There are many special finance dealerships out there that have the resources available to help those looking to finance a vehicle with bad credit, no credit, or other credit issues – and we can connect you to one.
At Auto Credit Express, we’ve been assisting bad credit consumers for over 20 years by matching them to local special finance dealers. We know how tough it can be to find financing when your credit isn’t great, and we want to take out the stress of searching for the right dealership.
Fill out our free and secure car loan request form, and we’ll get right to work connecting you to a dealer near you!