How to Build a Credit History Fast

Improving credit score efficiently

Credit history is used by financial institutions and lenders to help determine the risk level a potential client poses. Without a credit history it can be difficult to acquire a loan whether it be a credit card, car loan, education loan or even financing from a lending network of entrepreneur.

To build credit history fast requires knowing what the most important aspects of credit score are, and how credit history is used. According to the Fair Isaac Corporation, the developer of the FICO credit score, credit history accounts for 50% of an individual's credit score. The remaining 50% of credit score consists of items that are largely made possible through a credit history.

Since 15% of credit score is determined by the length of credit history, it makes sense to focus more on the 85% of the credit score that does not emphasize how long a credit history has existed, but rather how well one has managed types and amounts of credit within his or her credit history.

Instructions

Step 1

Research the credit

Research loan types, uses and rates before applying. Practical uses for loans in addition to building credit history multiply their utility. This way the credit line serves both a useful purpose while simultaneously building credit history. Also, the rate at which the loan is obtained can help with other aspects of building credit history.

Step 2

Apply for the loan(s)

Before opening a credit account, it must be applied for. Request realistic credit limits and do so in a shorter rather than longer period of time. The Fair Isaac Corporation uses time periods between credit inquiries in its credit score assessment and recommends fewer rather than more accounts be opened for persons with a short credit history. The accompanying video on this page provides tips for first time credit applicants.

Step 3

Use the credit

Without actually using credit that has been granted, a more complete credit history can't be attained. Using credit is important because it gives creditors and credit reporting agencies such as Equifax more information to base a credit score on. Having a low credit balance is good for credit history. A low credit balance affects the debt to credit ratio which is the amount of credit used in proportion to the credit available. Similarly, a low debt to credit ratio has a positive affect on credit use within credit history.

Step 4

Pay bills

Paying bills on time and consistently is very important in building credit history quickly. Loans with credit cycles of 30 days or less should have at least the minimum payment posted before the due date. Paying several days early avoids late postings and potential payment history complications.

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You will Need

Loan application(s)

Financial responsibility

Positive cash flow

Timely payments

Tips & Warnings

Make regular, but limited use of the accounts

Keep accounts open after paying them off

Aim for fewer accounts with larger credit limits

How to keep your good credit score

by A.W. Berry

After working to get a credit score to its best numerical value i.e. between 735-850, keeping it there may also require some maintenance. Keeping a credit score high shouldn't be a challenge so long a...More>
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Comments (1 to 1 of 1)

beth king

Jan 18, 10 at 09:55 PM

Great article, I didn't know about fewer cards with higher credit, being best. Good tip!

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A.W. Berry
Helium member since Apr 25, 07
Number of Guides: 7

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Money Management & Credit : How to Build Credit When I Don't Have Any

The best way to build credit when you don't have any is to have someone with good credit co-sign on a small loan or credit card, which paves the foundation for good bill-paying habits. Build up good credit from scratch withadvice from a registered financial consultant in this free video on money management. Expert: Patrick Munro Contact: www.northstarnavigator.com Bio: Patrick Munro is a registered financial consultant (RFC) with outstanding sales volume of progressive financial products and ...

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