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There are many reasons to build credit quickly, but the most common is to buy something. You need to raise your credit score in 30 days to get a loan for a car. You can work on a top rewards credit card to get a better score on it first. In this article, we show you seven ways to build credit and reach your goal. These tips will help you build credit or fix it if necessary.
Understanding Credit Scores
Many people have more than one credit score, which shows how good their credit is. Credit records don't say if someone is creditworthy; instead, they give scores ranging from "poor" to "excellent." The two essential credit numbers, FICO and VantageScore, range from 300 to 850 for each customer. Higher scores are always better, and lower scores could cause problems in the long run with both judging types.
How to Improve Credit Scores
Let's look at the most important things affecting your credit health and scores, as well as the pros and cons of building credit when needed.
1. On-time bill payment
Pros
- There is no need to pay late fees or interest
- How to improve your credit score
- Don't pay late and hurt your credit
Cons
- It needs to be organized and planned
Since payment history is the most essential part of credit scores, paying your bills on time may significantly affect your credit score. Two late payments will also hurt your credit score a lot. You can make sure you pay all your bills on time by making a monthly budget with due dates and a list of payments. To make things easier, some bills you get often may be sent automatically.
2. Reduce your credit use
Pros
- A big boost to your credit score
- Paying off debt can help you save money on interest
- You can instantly lower your credit usage by asking for a new card
Cons
- When money is tight, it's easier to pay off debt
- It could take months to get rid of credit card debt
- When you pay off your debt, you use credit cards less
- Needs self-control and planning ahead
Your credit usage ratio is the next most important part of your FICO score, so paying down debt close to your credit limits will help your score. You could get a credit card or pay off your debt to raise your limits. No matter what, most experts say that the best thing to do is to keep all open credit accounts below 30% credit usage. You should always owe less than $3,000 on a $10,000 open credit.
3. Apologize for the late payment
Pros
- Don't let your credit score drop for no reason
- It's only 15 minutes, and there's no risk in asking
Cons
- Your lender may refuse your request and let others know you are behind on payments
Your payment history is the most important part of your FICO score, so late payments can greatly harm it. If you're late on a bill, call the person who sent or received it and ask for a request to extend it. Creditors may give you a one-time pass on a late payment so that it doesn't harm your credit score in the long run.
4. Update credit reports
Pros
- Make regular payments to build credit
- Some services that help you build credit are free
- Do this in a few hours
Cons
- Some companies charge when they report rent to credit bureaus
- Experian Boost only looks at your Experian credit record
If you have a few regular bills and a good credit background, it might be easier to build credit quickly. Luckily, many companies let you improve your credit score by adding payments you've already made to your report. The Experian Boost app can help you build credit on your Experian credit record to pay for rent, streaming services, and energy fees. Some companies, like Rental Kharma and RentTrack, offer rent credit for a fee.
5. Keep the oldest accounts open
Pros
- Old accounts may help your credit score, even if you don't use them
- There are times when no work is needed
Cons
- Credit can lead to debt growth
- You should call your provider to switch to Should with no yearly fee
On average, 15% of your FICO score is established by how long your credit history has been. Keep older lines of credit and rolling accounts open to boost your credit score, even if you don't use them. This stage is usually free, but old credit cards might charge you to keep them open. However, you can call your card provider and ask to be switched to a similar card that doesn't cost anything yearly. If you do this, you might be able to keep that line of credit for free.
6. Don't excessively add new credit
Pros
- Lowers credit use, which raises credit
- It keeps new loans from being made
- Credit card rates may go down
Cons
- It's hard to take out more credit when money is tight
- Credit card sign-up bonuses and deals may need to be taken into account
Since 10% of your FICO score is based on new credit, getting new accounts will lower it. This is mainly because lenders check your credit history when you ask for loans or credit. Don't take out any new credit until you need it. This will help your credit score, and it's quick and easy to do. You'll need to use your cash to build credit.
7. Debt Consolidation
Pros
- Cut down on your weekly payments
- Save money over time
- You can pay off your debt faster if you make monthly payments on time
Cons
- There are fees to move balances
- It takes time to pay back debt
- Discipline is needed to stay out of debt
- When introductory APR deals end, your card's changeable APR will occur
If you utilize a balance transfer credit card, you can better handle your credit card debt or lower your monthly interest payments. Moving debts to this credit card has a 0% APR for 21 months, but you must pay a 3% or 5% balance transfer fee.
Balance transfer fees eat away at funds, but not having to pay credit card interest for 21 months could save you a lot of money. Your credit usage ratio may drop immediately if you get a new credit card. If you pay off your debt, it can go down even more. Consolidating your debt makes budgeting easier by combining your credit card payments into monthly payments.
Conclusion
If you want to build credit quickly, you will need more than one night to raise your credit score by 100 points. However, you may soon get better credit if you carefully use your credit, pay your bills on time, keep your debt low, and monitor your credit records.
