Follow Some Simple Rules and You Can Build Credit Fast : Inside US

If you need to build credit fast – or rebuild it after a financial fiasco – you’re in the right place.

You’ve probably heard that you need a long credit history (a trillion years, at least) and a whole slew of credit lines to have an “exceptional” credit score, which is 800-plus. Honestly, it does take a while to get an exceptional score, but right now, that shouldn’t be your focus.

At this moment, your goal is to boost your credit as fast as you can. If you stick to a few rules, you will increase your credit score within the next few months.

It can feel daunting to build your credit score from scratch (or rebuild it after a money disaster). But once you’ve got an eligible account on your credit report, all it takes is time and patience.

Here are the minimum requirements for a FICO score:

OK, the last bullet point sounds a little comical, but there’s a reason it’s listed. If you shared an account with someone who died and who was reported as deceased, then this could affect your credit. If possible, try to open an account in your own name.

With VantageScore, another consumer credit scoring model, it’s possible to generate a credit score in about a month or so. But you have no control over which score a lender will request. There’s always the chance you’ll get lucky, and your lender will use VantageScore. But be prepared for a six-month wait since 90% of lenders use FICO scores.

Remember, you’re looking for ways to move up in the credit world, so don’t worry about your low – or nonexistent – FICO score. The goal right now is to take steps to remedy your credit situation.

Here are six ideas to get you started.

With these cards, you make a security deposit, which often becomes your credit limit. You get a credit card that looks just like an unsecured credit card. As long as the issuer reports to the bureaus and you use the card responsibly, you’ll build a good credit history.

These cards are fairly easy to get, but if you’re rebuilding your credit and you have a lot of negative items on your credit report, it’s possible to get turned down. If this happens, there are a few decent secured cards that don’t do credit checks. But be sure you read the fine print because there are also predatory lenders out there that target consumers in your situation.

If you’re uneasy about getting a secured credit card, then a credit-builder loan is a good option. Your score won’t matter. But you do have to show proof of income so the lender knows you can make monthly payments.

Here’s how it works: You apply for a loan (with payments you can afford), and when approved, you deposit the amount you “borrowed” into a savings account. You then make monthly payments until you’ve paid off the amount. Note: There are variations among lenders when it comes to credit-builder loans. Some, for example, might not require a deposit. So, read the terms and conditions carefully so you understand how the loan will work.

When it’s paid off, if you were required to make a deposit, you’ll get that money back, possibly with a little interest. These loans are more likely to be offered by credit unions and local banks, so shop around and find a loan that works with your budget.

This is a way to build credit by using someone else’s credit. You find someone, usually a parent or a relative, who has excellent credit. Then, you ask if this person would be willing to become a co-signer so you can get approved for a credit card.

Clearly, this can become a sticky situation. If your target co-signer is willing, then suggest a face-to-face discussion about the rules. Decide how much you’ll spend on the card each month, what payment reminders you plan to set up and what happens if you default on the account. And keep in mind that not all of the major issuers allow co-signers, so do your research before the meeting.

Legally, your co-signer is also responsible for your debt. So, it’s essential you hold up your end of this. Can you imagine what holiday dinners will be like if you don’t pay the bill on time? That alone should be enough incentive to do a good job and focus on building credit.

If you prefer to avoid the possible complications that can occur with a co-signer, then ask someone with great credit if you can become an authorized user on one of their credit cards.

This person is typically a parent or relative who is willing to help you build credit. If you’re an authorized user on someone’s credit card, this means you are not liable for any debt that occurs. The account owner is legally responsible. So, be very responsible with the credit card. If you max out the card, this has a negative impact on the account owner’s credit score.

The two of you should set dollar limits and agree on how the card can be used. And again, do a good job. You’ll build credit, and the account owner will be impressed by your sense of responsibility.

This strategy is unlikely to build credit fast, but your score should get a boost. After six months, integrate another strategy, such as a secured credit card, to get your credit score on an upward swing. Together, these strategies can help improve your credit in a hurry.

I listed this option last because it isn’t a strategy you should rely on exclusively to build credit fast. If you pay rent, then check into this. But the value is unpredictable, so use this option in addition to one of the other credit-building suggestions listed above.

You may be able to get your rent to show up on your credit report, but that doesn’t mean it will be considered when your credit score is calculated. There’s still possible value, though. If a lender is reviewing your credit report, your excellent rental payment history will at least be seen.

It isn’t possible to report your own rent payments to a credit bureau. So, ask your landlord if your payments are reported to a rent-reporting service, such as Experian RentBureau or PayYourRent.

There are several companies that will report your rent payments to the bureaus. The cost varies, depending on if your landlord participates, so check what your monthly cost will be.

Credit report errors do happen, and, depending on the error, it can impact your credit score. At the start of your credit-score journey, it’s a good idea to check your credit reports from the three major bureaus: Equifax, Experian and TransUnion. You can access your reports for free at AnnualCreditReport.com.

Be sure you review account information as well as your personal information, such as your Social Security number. If you have a negative item, such as a collection account, check the date and the amount. Most negative information stays on your report for seven years. You want to make sure that the information is accurate and that it falls off of your report after the required reporting date ends.