7 Proven Methods to Starting Credit History Fast
Introduction to Starting Credit History
For those who have yet had the chance to begin building credit, it is never too early to start considering your credit score and how establishing credit can affect that score. If you are one of the many who will soon begin building a credit history, then it is important to consider your first steps. Though it’s impossible to build up a high credit score in a short period of time, your first credit choices can set the tone for what is to come in your life as a credit holder. Make your first choices smart ones, and don’t underestimate yourself—you too can be a savvy consumer.
When considering your credit worthiness, the main detail that credit agencies take into account is your FICO score. This score is compromised of a number of details, including length of credit history, payment history, amounts owed, new credit and types of credit used. But if you are one of the many individuals who have yet to amass a credit history, you must begin building that history by using other means. In that case, credit agencies will consider details such as employment history, starting credit cards, bank accounts, residency history and paid subscriber services in your name.
Though you may not have a credit card, most likely you do have a bank account. Having a bank account, no matter how small the balance, is an important and necessary first step in obtaining credit. If you maintain money in a checking or savings account over a period of time (usually the longer the better), creditors can use that to gauge your credit worthiness. Also, because of the relationship that you have created with your bank, they can give valuable advice and help in receiving credit; for instance, if your bank issues their own credit cards through one of the major companies (Visa, Mastercard, Discover), your relationship may help you qualify for the card.
Your bank should be your first stop in your attempt to get approved for credit, but they aren’t the only place. Department stores are constantly making efforts for costumers to apply for their credit card accounts, and they are usually far less picky than other creditors. Though it’s usually not a good idea for those who already have credit to sign up for a department store account (the cards usually carry extremely high interest rates), for those who are new to the game it could prove to be a very good opportunity. Apply for the card, make a few purchases, and be sure to make the monthly payments on time—with time more creditors will begin granting you accounts due to the small credit history that you have begun.
Once you start credit history, it is imperative that you use your credit wisely and pay off all balances in a timely manner. With a little forethought and some intelligent decision-making, you can start on the road towards a rewarding credit future. With that said, here are 10 easy to do methods that will almost instantly boost your credit score.
7 Starting Methods to Have Great Credit Fast
- Get credit. The first and most obvious is to get credit. For beginners with no credit history, this is likely going to be a secured credit card or a starting credit card that has low credit history requirements.
- Pay on early. It counts to pay early. Why? Because it builds an excellent habit for yourself. You are paying and giving yourself more than enough time so when an emergency arises, you are well prepared. This tip may not work directly on increasing your score, but when you ask for a limit increase or any reviews done on your account, they companies will see how trustworthy you are with payments.
- Pay more than minimum. Not only is it smart to pay more than your minimum, it’s just fiscally responsible. If you pay just your minimum, this is exactly what the credit card companies want you to do. They make maximum profits and you lose maximum money which happens to be a ridiculous % rate. Pay more than your minimum every time. A good rule is to always pay 70-100% of your balance, this is a surefire way to increase your score faster.
- Low balances are better. It’s generally better to keep low balances on your credit accounts. This means you are not “in need” of the money and thus companies can trust you more, or so the logic goes. Try to spend up to only 50% of your maximum spending limit as a rule. This is to make sure you’re able to meet pay requirements #1 and #2 for the most effective way to build your credit profile.
- Build history for 12 months. After starting your first credit card for 12 months and assuming you paid on time and have kept low balances. Your options should start to open up. The first thing you can do is start by asking for a credit limit increase. Assuming you haven’t tried applying for loans or credit within these 12 months, you should be easily approved for about double your current limit.
- Increase your limit. Increasing your limit helps your creditworthiness because it shows you are able to have a better ability to pay, and to pay more. These are good signs for credit companies since there is a potential for more profit in your case. You’ve done a good job so far, so get that limit increased so you can spend a little bit more and still maintain a very low balance/max limit ratio. You’re well on your way to killer credit.
- More credit builds more credit? At this point you’re probably 2 years into your first credit card. You’ve kept up with payments, balances low and have even successfully gotten increases in spending limits. You’re in perfect credit shape now. At this point, you can get another credit card from a bigger company who will definitely allow you to spend more. Keep these few cards of yours good and you’re well off on your financial future.
Once you secure a certain amount of solid credit history, you will easily be able to take out an auto loan or other loans, which is your next big step. Keep responsible for your credit because remember, it’s not your money, but it’s your trust that’s on the line. You don’t really want to find out what happens if you back out and not pay any of these companies. Cheers to your credit building success!
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