Your credit score is an integral part of your financial picture. It determines both whether you can borrow money and the interest rate you’ll be offered. It can even be a factor in determining whether you can rent an apartment or qualify for a job.
Because your credit score has such a significant impact on your finances, you may find situations where you need to boost your credit score quickly.
It’s important to know what factors impact your credit score and how improving them can boost your score quickly.
Here’s what you need to know about building your credit score:
Your credit score is an indicator to lenders of how responsibly you use credit and manage debt.
It’s largely determined by five key factors: your payment history, amounts owed, length of credit history, credit mix, and new credit. Some factors are more important than others, and the best way to maintain a healthy credit score is to improve all five factors
| Factor | Percent Of Score | Definition | Tip |
|---|---|---|---|
| Payment history | 35% | How consistently you’ve paid your bills on time | Make on-time payments to avoid delinquency |
| Amounts owed | 30% | The percentage of your available credit you’re using | Use a small percentage of your credit and increase your credit limits |
| Length of credit history | 15% | The age of your oldest account, the age of your newest account, and the average age of your credit history | Don’t close old, paid-off accounts, and be thoughtful about opening new lines of credit |
| Credit mix | 10% | The types of credit you have open, including credit cards, installment loans, mortgages, and more | Diversify your borrowing with different types of credit |
| New credit | 10% | New inquiries for credit that appear on your credit report | Avoid applying for multiple credit cards or loans within a short period |
If you find that your credit score needs some work, here are 11 ways to build your credit fast and effectively.
If you have a spouse, parent, partner, or trusted friend who has excellent credit, consider asking them if you can become an authorized user on their credit card. As an authorized user, you’ll get credit for the account but won’t be responsible for the charges.
Most major credit card issuers will report your authorized user status to the three main credit bureaus (Experian, Equifax, and TransUnion), but it’s a good idea to double-check that they do. Otherwise, this method won’t improve your credit score.
For example, a parent adds a teenager to their card as an authorized user with the understanding that the card can only be used for emergencies and that they must pay back the charges. On the other hand, spouses who share finances may add each other as authorized users and freely use each others’ credit accounts.
By coming to an agreement beforehand, you can avoid straining your relationship with the primary cardholder.
Unlike a traditional credit card that requires no collateral, you’ll need to provide a deposit to open a secured credit card — this deposit amount will be your credit limit. Because there’s less risk to the lender, you might have an easier time qualifying for a secured credit card with poor or no credit compared to an unsecured credit card.
You can use a secured card as you would use a traditional credit card: making purchases against your credit limit and paying them off. If you make your payments on time, you can build a positive payment history and improve your credit.
Additionally, some credit card companies will let you switch your secured card to a regular credit card and get your deposit back after making on-time payments for a certain period of time.
The best way to avoid paying interest is to pay off your card by the due date each month and avoid carrying a balance.
Learn More: Getting a Loan with No Credit: 5 Loans for New Borrowers
Credit-builder loans and secured personal loans can be used to help you establish your credit score by building a positive payment history, similar to a secured credit card.
These loans are offered by several traditional banks, credit unions, and online lenders. Credit-builder and secured loans are generally quite small, usually $1,000 or less.
Here’s how they work:
If getting a secured credit card or loan doesn’t seem right for you, another option to consider is applying for a credit card or loan with a cosigner.
A cosigner can be anyone with good credit — such as a parent, other relative, or trusted friend — who’s willing to apply for and share responsibility for the loan with you.
Having a cosigner could improve your chances of getting approved for a loan if you have poor or no credit. Even if you don’t need a cosigner to qualify, having one could help you get a better interest rate than you’d get on your own.
Check Out: How to Consolidate Bills Into One Payment
Rent payments aren’t typically included in your credit report, which means they aren’t factored into your credit score. But several services can help you get credit for these payments, such as Experian RentBureau, Rental Kharma, or RentTrack.
By having your rent payments reported to the credit bureaus, you could improve your payment history and potentially boost your credit score.
An important step to improving your credit score is knowing what’s on your credit report. It’s a good idea to regularly review your credit reports from each of the three credit bureaus.
You can request these reports by visiting AnnualCreditReport.com, where you can currently get free weekly credit reports. When you request your reports, you’ll enter your personal information, indicate which credit bureaus you’d like to see your credit report from, and receive your reports.
Your credit report will show you all of your accounts, including your payment history, missed payments, the date each account was opened, and your account balances.
Your report will also show any new credit inquiries within the past two years. You may have many soft inquiries, which happen when a lender checks your account for preapproval or prequalification offers. A hard inquiry, on the other hand, often accompanies an application for a new credit account.
Other items that may appear on your credit report include bankruptcies from the past 10 years, unpaid child support or alimony, and collections accounts.
It’s wise to regularly review your credit report to catch errors that might be damaging your credit score.
If you check your credit reports and find any errors, such as incorrect late payments or charge-offs, be sure to dispute them with the appropriate credit bureaus to potentially boost your credit score. All three credit bureaus allow you to dispute errors via telephone, mail, or online.
When disputing a credit report error, be prepared to provide documentation to help the credit bureau investigate your claim. Such documentation can include a billing statement, a letter from the creditor or IRS, or a canceled check or money order proving payment.
A company that finds it has reported inaccurate information to the credit bureaus is required to notify all three credit bureaus of the correct information. However, it may be worth disputing the information yourself with all three bureaus to ensure it’s removed from your report.
Check Out: Personal Loans With 550 Credit Score: Can I Get One?
One of the major factors of your credit score is your credit utilization ratio, which is the amount you owe on revolving credit lines (such as credit cards) compared to your total credit limits. For example, if you have one credit card with a $1,000 limit and a balance of $500, you have a credit utilization of 50%.
To lower your credit utilization, ask your card issuer to increase your credit limit. In general, card issuers are friendlier to requests from longtime customers who have good credit and pay their bills on time. They might also accept the request if you can show an improvement in your credit.
Keep in mind that the card issuer might perform a credit check to see if you qualify for the increase.
Another possible way to build your credit is by paying down your existing debt. For example, if you reduce your balances on credit cards or lines of credit, you could improve your credit utilization and boost your credit score.
This might also help you lower your debt-to-income (DTI) ratio — the amount you owe in monthly debt payments compared to your monthly income. While your DTI ratio doesn’t impact your credit score, having a low ratio could make it easier to access credit in the future.
Here are a couple of payoff strategies to consider:
Check Out: How Debt Consolidation Loans Can Help Your Credit Score
Your payment history is the largest component of your credit score, which is why it’s critical to make consistent on-time payments to see an improvement in your score.
One way to avoid missing payments is by setting up automatic payments, either through the company or through your bank. Some companies and lenders even offer a discount to customers who enroll in autopay.
Debt consolidation is the process of taking out a personal loan to pay off multiple types of debt, leaving you with just one loan and payment to manage. Depending on your credit, you might qualify for a lower interest rate than what you’re currently paying.
Taking out a debt consolidation loan might also help your credit in the long run — for example, if you make on-time payments or are able to diversify your credit mix with a personal loan.
If you’re thinking about getting a debt consolidation loan, here are some pros and cons to consider first:
| Pros | Cons |
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Learn More: 3 Steps to Get a Debt Consolidation Loan for Bad Credit
If you decide to take out a personal loan for debt consolidation, be sure to consider as many lenders as possible to find the right loan for your needs.
Here are the answers to a few commonly asked questions about building credit:
Your credit score is calculated based on several factors from your credit report. Here are the components included in your score and what percentage of your score they make up:
A couple of ways to begin establishing a credit history include:
Whether you can raise your credit score in 30 days will mainly depend on where you’re starting.
While there’s no guarantee that you can increase your credit score by 100 points in just one month, some strategies could lead to higher jumps than others.
For example, paying down a significant portion of existing debt or improving your payment history could both have a major impact on your score — though it will likely happen over time.
The fastest way to build credit will vary depending on what’s already on your credit report — for example:
Erin Gobler contributed to the reporting for this article.
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