Ten Fast Ways to Build Credit


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24 March 2020

Your credit score matters. It dictates if, and on what terms, you will be extended credit for things like credit cards, mortgages and loans.

Many of us are looking to boost our credit score, and are on the lookout for fast ways to build credit. Thankfully, there are lots of ways to brighten your financial future. Here are ten effective and fast ways to build credit:

Regularly check your own credit history

CreditKarma can provide you with a free, detailed, on-demand report. The three older credit bureaus – Equifax, Experian, and TransUnion – also allow you a basic copy of your own credit report for free. Keeping your credit score front of mind will encourage you to always engage in credit positive behaviour.

Rectify any errors you find on your report

Incorrect information could harm your credit score. Another one of the fast ways to build credit is to iron out any mistakes on your report. Have a close scan, and if you find an error – a missing repayment, for example – report it to the credit bureaus and get it repealed from your report. 

Pay on-time, all the time

This is one of the most guaranteed fast ways to build credit: consistently make full and on-time credit payments. Simple but true. Pay your bills. Regular good behaviour on this front can even outweigh your previous mistakes, provided you start doing it consistently.

Gain credit via your rent and utilities payments

If you pay rent and/or utilities, it is possible to boost your credit score via these payments. Lenders will now consider regular payments of this kind as strong evidence of creditworthiness; align yourself with a data furnisher like LevelCredit, and you can unlock this powerful source of alternative credit data. On average, LevelCredit users increased their credit score by an average of 20 points in two months, and 50 points after two years. Consumers who started with scores below 600 saw an average increase of 28 points within two months and 70 points after two years. These score gains translate into a greater hope and optimism about the possibilities and potential of a person’s life. 

Settle your debts.

That’s right. One of the guaranteed fast ways to build credit is to pay off your old bills, even the ones that are long overdue. This will be a sign of good behavior to lenders, telling them that you are willing and able to pay your debts off as long as you are given a chance. This also increases your amount of available credit and, in turn, your credit score.

Don’t close your old accounts.

By keeping your old accounts open (even after settling your debts), you can lower your credit utilization ratio (the total amount of credit you have compared to how much you use). This will boost your score, because you’re not using a lot of the credit that’s available to you – a sign of good behavior in the eyes of lenders.

Have creditors increase your limit, but don’t use it all. 

Another one of the fast ways to build your credit is to get creditors to increase your limit. This all plays into the idea of keeping your credit utilization ratio low. Get access to credit, but crucially, don’t use all of it. Lenders like to see that borrowers can effectively manage a credit cushion, and only use it carefully and selectively. 

Avoid applying too much, too fast for credit. 

Another one of fast ways to build your credit involves what not to do. Whenever you apply for a new credit account, the lender performs what’s called a “hard pull” on your credit report. This can lower your score by 5 to 8 points each time. Applying for too much credit too fast can see these minuses accumulate, and cause a significant drop in your score. Think carefully before applying for any new credit. 

Diversify your debt. 

Spread what you owe around. This is one of the easiest fast ways to build your credit. Juggling a diverse set of debts – installment loans, credit cards, and auto loans, for example – and paying multiple smaller payments can make you look good to lenders. Rather than playing occasional, slow, large payments to one debt source, get nimble and show more repayments. 

Use your credit card – responsibly. 

Last tip: be responsible with your credit card, but don’t be scared to use it. Lenders like to see people utilize their credit, as long as they do it responsibly. A few small purchases a month through your credit card, if consistently paid off, will be a big boost to your score. Just remember to pay your bills!