Imptovecredit Score_Couple chat _Web

14 Tips on How to Build Credit Fast

Updated January 4, 2021 . AmFam Team

Short on credit history, but wondering how to build credit, fast? Learn more with our 14 tips that teach you how to improve your credit score — from American Family Insurance.

Would you be surprised to learn that you can build credit today quicker than ever before? By becoming an authorized user on another’s existing credit card, you can begin to take control of your credit rating. And you can also leverage the payments you’re making monthly — from rent to utility bills — by getting those details to credit reporting agencies.

To help you build your credit history, we’ll explore how to increase credit scores by opening a line of credit with a secured credit card or a secured loan. So, on to the big question: how can you improve your credit score, quickly? We’ve got 14 tips on how to raise your credit score fast that are sure to help.

How Long Does It Take to Improve Credit Score?

The answer depends on the conditions of your debt and overall payment history. If your FICO score took a hit when you opened a new credit card or maxed one out — that can usually be resolved within a few months.

But if you’ve made a habit of missing payments, you may be looking at a couple of years of making steady payments to get your credit score back on track. No matter where you’re at on that scale, there’s a lot you can do to improve your credit score quickly.

How to Improve Your Credit Score

You've got some great tools available to boost your credit score: you’ll first need to get a copy of your credit report and verify it’s accurate. If errors exist and are left unchecked, credit bureaus may ding you with a lower score than you deserve. Here are several key suggestions to help you improve your credit score:

1. Request Your Free Credit Reports

To get your free annual credit report, you’ll need to contact each of the credit reporting agencies separately and request it:

2. Verify the Contents of Your Credit Reports

Review each of these reports thoroughly, verifying the following details are correct on each:

  • Credit card accounts and balances
  • Details on payments made on time
  • Debt payment history
  • Balances due of accounts open currently
  • Number of closed accounts
  • Personally identifiable information is identical across all reports — complete name, address, SSN, date of birth, etc.

3. File a Credit Report Dispute If Errors Are Present

If you find any issues, be sure and contact the credit reporting agency immediately and work with them to file a dispute. If there are charges you don’t recognize, it may be necessary to place a freeze or block on your social security number.

When you’ve got ID Theft coverage with American Family Insurance, we’ll help you file your fraud claim and our team will help you manage the issue, which can be quite time-consuming and costly.

4. Pay Your Bills on Time — Every Time

Paying your rent and utility bills on time is the #1 step when it comes to how to improve your credit score. Setting up automatic payments from your bank account can help you stay on schedule.

5. Become an Authorized User on a Credit Card

Ask a friend or family member to contact their credit card issuer and have you registered as an authorized user. The card issuer will need your personally identifiable information in order to process the request. And the payoff can be big: you may find yourself with a credit score boost in a few months’ time.

6. Pay Off Debt and Accounts-in-collections Quickly

Paying off student loans and other debt can help raise your credit score. One smart way to start hacking away at that debt is to make smaller, bi-weekly credit card payments vs. one monthly payment.

Scheduling automated payments can help you pay down that credit card debt more quickly, which is one of the fastest ways you can boost your scores. And if you’ve got any accounts on your credit report that are in collections, lenders may settle for a lesser amount if you approach them with a plan to pay the debt back. 

7. Report Rent and Utilities to the Credit Bureaus

Try registering with Rental Kharma (Opens in a new tab) to get your rent and utilities reported to the credit reporting agencies. For a small fee, they’ll process landlord and utility payment data (up to six months’ historic data, too) and inform the credit reporting bureaus each month.

Another option is to register with Experian Boost (Opens in a new tab) which is a free service for those with an Experian account. According to Forbes, 86 percent of consumers with a thin credit file who used Experian Boost experienced an instant FICO 8 score increase — up to 19 points.

8. Apply for a Secured Loan or a Credit-building Loan

Another great first step for establishing credit is to get a secured credit-builder loan. It works like this: you’ll deposit a few hundred dollars into a secured loan savings account, which acts as collateral on a loan from the lender.

You’ll then make scheduled payments — which are reported to the credit bureaus — until the amount you owe is paid back. The deposit is then released back to you after the account is closed. Secured loan groups like Kikoff (Opens in a new tab) and Self (Opens in a new tab) may be worth considering. After you’ve proven that you can pay back the loan, your FICO score may improve and credit card issuers can be quick to offer credit.

9. Apply for a Secured Credit Card

Getting a secured credit card (Opens in a new tab) is another great way to start building your credit from scratch. You’ll typically deposit around $200 cash into the secured account or pay an annual fee. Each month, you’ll be responsible for making timely payments. After the account is closed in good standing, you’ll get that security deposit back and your credit rating may go up.

10. Use Less Than 30% of Your Available Credit

Do your best to keep your balances way below your credit card limit. The amount you owe compared to your credit limit (or your credit utilization ratio) typically has a big impact on your credit score. If your monthly credit card spending is usually close to your credit limit, it can negatively affect your score — even if you pay off your credit card bills on time. If you can get your spending down to 20% of your limit, that’s a great formula for a real credit rating boost.

11. Stop Shuttling Debt From One Interest-free Card to Another

Although you’ll save on interest payments, moving credit card debt from one account to another does little to improve your credit score rating. Instead, work hard on paying down the amount you owe each month by saving money where you can.

12. Request a Higher Credit Limit

One key move you can make is to request a higher limit on your current card. If you’re looking for ideas on how to increase credit scores, this is a good one.

The idea is to up the ceiling on purchase limit, but spend less each month so that credit utilization ratio improves. Note that this may result in a "hard inquiry" of your credit report, which could result in a brief drop of your credit rating. You may find you’re on the way to your best credit score ever!

13. Keep Credit Cards Open

While you might think having fewer credit cards would help you improve your credit score, that may not be the case. In fact, closing credit cards can ding your credit score, because closing a card means losing its limit, which effects your overall credit utilization ratio.

14. Cluster Your Hard Credit Inquiries

By grouping your mortgage or credit card applications into the same two-week window, credit reporting bureaus will usually view them as a singular inquiry. But if you apply for a mortgage and five months later apply for a credit card, you may find a drop in your rating due to those multiple inquiries. Those small dings add up — and eventually, they can affect your interest rates.

Get ID Theft Coverage Before You Need It

These tips can get you on the right track to making payments on time, which can help you plan for your future and work towards your dreams! While you’re taking on these tasks, remember to reach out to your American Family Insurance agent (Opens in a new tab) and request a quote on identity theft coverage. You’ll have more peace of mind knowing you’ll have the right support when you need it most.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.

Related Articles

  • Family of four walking hand in hand down beach
    Family of four walking hand in hand down beach
    Ways to Save Money for a Family Trip

    Among the many joys of being a parent is the opportunity to share your passions with your children. From exploring your favorite hobbies to diving into cherished family recipes, as your kids grow so do the memories you create together.

    Going on vacation with your children is a great way to bond with them, but it can get costly. The good news is that getting out of town doesn’t have to break the bank. Plan for your next family adventure by exploring the tips in these family vacation FAQs.

  • Man using entering his credit card info into his cellphone.
    Man using entering his credit card info into his cellphone.
    Credit and Identity Theft Monitoring

    Protecting your home with a security system and locking your doors when you leave for the day are measures you might take to protect your home from intruders. Credit and identity theft monitoring are a type of “security system” that protects you from intruders gaining access to your personal information. From credit fraud to identity theft, everyone is susceptible to these types of breaches — that’s why it’s so important to defend yourself against them.

    Credit monitoring and identity theft protection are two different ways to proactively protect yourself if your personal information gets into the wrong hands. Let’s take a look at the differences and why it’s important to implement them both together.

  • Couple looking at housing prices
    Couple looking at housing prices
    Saving for a House

    There are a few defining moments in our lives. For some, it’s the realization that buying that first home is within reach, both financially and emotionally. It’s a big step, and it’s one that’s built into the American dream. And if you’re left wondering how much money you should save before buying a house, you’re not alone. These costs can add up quickly.

    After you’ve made the big decision to start shopping for a home, you might be surprised to find that coming up with the cash down payment is only one of several financial hurdles you’ll need to clear. Exactly how much you should save for a house depends on a number of factors, like the value of the home you’re targeting and the amount of money you intend on pushing into your down payment.

  • A white woman budgets for saving money using a calculator at a cafe.
    A white redheaded woman works on her budget for saving money with a calculator at a cafe.
    Pay Off Student Loans or Buy a House?

    After college, life moves fast. You get your first big job, move out of your parents’ house and start a whole new life on your own. For most people, this also means paying off student loan debt from your college tuition. Having this debt may make big milestones like buying a house seem far off, but there are ways to make the leap from renter to homeowner even if you have student loans. So can you get a mortgage while also paying off student debt? Or should you wait to pay it off before you buy a house?

    Every situation is different, so it’s important to do the right research and choose the best option for you. Luckily, we’ve done some of the breakdown for you to help you decide whether to pay off your student loan entirely or buy a house.

    Can Student Loans Affect Buying a House?

    Typically, student loan debt doesn’t prevent you from getting a mortgage. The biggest thing to note is that student loan debt does influence your debt-to-income ratio, which is a factor lenders consider before giving you a loan. It can also affect the interest rate you pay on your mortgage.

    Buying a house with defaulted student loans

    If you’ve defaulted on your student loans, it’ll be more difficult — but not impossible — for you to get a mortgage. Because defaulting negatively affects your credit score, lenders will be less likely to want to give you a loan or will charge a much higher interest rate on a loan.

    Getting a home loan with student loan deferment

    If you’ve deferred your student loans, this usually won’t affect your chances of getting a mortgage. Just be sure to consider how the future estimated payments will factor your debt-to-income ratio. Some types of mortgages may reject applicants with deferred loans, so do your research on the different types of mortgages before shopping.

    Should You Pay Off Student Loans Before Buying a House?

    Buying a house is expensive, there’s no doubt about that. It can seem smart to hold off on house shopping while you still have student loan debt, and it can be even more difficult to save for a house if you’ve got a high debt-to-income ratio. But if you have enough income to handle the payments for both, you may want to consider investing in your first home.

    Signs You Should Pay Off Student Loans

    When considering whether to pay student loans or save for a house, there are a few factors that can help you decide if paying off your student loans should be a priority.

    Your debt-to-income ratio is too high

    If the amount of money you bring in monthly or yearly is almost the same as the amount of money you pay out in debts — like student and car loans or credit cards — it may be best to pay down your debt before buying a house.

    You’ve defaulted on your loans

    Defaulting on your loans has a severe negative impact on your credit score, which tells lenders that you’re a bigger risk to take on. Work on improving your credit score before shopping for a mortgage.

    You’re struggling to make payments

    If you feel like you’re living paycheck to paycheck or struggling to make payments on your loan every month, it’s best to hold off on saving for a house. Need help keeping track of your student loan payments? Try our student loan payment tracker to get organized.

    You haven’t saved for a down payment or emergency fund

    Before you start picking out which houses you want to tour, you should take a look at your savings. If you don’t have enough for a 5 to 10 percent down payment or enough as an emergency fund for home expenses — like a broken dishwasher or damaged roof — take more time to put money away for your first home.