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Unless you have an absolutely perfect credit score—850—we’re willing to bet that you’d like to know how to build credit fast. After all, your personal credit score is the number one factor that affects your ability to qualify for business financing and get favorable rates. As a result, many business owners and consumers alike want to know the best steps for figuring out how to build credit quickly.
Building credit requires a multi-pronged approach, and the truth is that there’s no overnight solution. To build credit as fast as possible, you need to focus on paying your bills on time. Your credit rating is with you for the long haul and often comprises years and years of credit history—so you won’t be able to build credit dramatically overnight.
That said, there are some steps you can take to build credit quickly. Learn about how to monitor your credit, the best ways to build credit fast, and what factors into your building credit score.
Before you can start building credit fast, you should know what actually goes into your credit score.
Your credit score measures how responsible you are with your financial obligations. When a lender, a bank, or even a potential employer looks at your credit score, they’re essentially asking themselves, “Can I trust you?”
Credit scores—the most popular of which is the FICO score—span a range from 300 to 850, and the higher the score is, the better. A good credit score—generally considered above 670—shows that you’re responsible with your financial obligations and a safe borrower to work with. On the other hand, if your credit score suggests that you often don’t repay what you owe, or that you’re always late to repay, lenders are less likely to trust you with their money.
There are three main credit reporting bureaus that monitor your personal credit score: Equifax, Experian, and TransUnion. Each bureau has its own formula for reporting credit score, and not all creditors report to all the bureaus. As a result, there might be minor variations in your score across credit bureaus. That said, if you have a good score at one bureau, you probably have a good score at the others.
There are five major elements that factor into your credit score:
These factors give you a clue into what you need to do to improve your credit. For instance, payment history has the largest impact on credit, so by paying bills on time, you can do a lot to improve your credit score. The types of credit you use is a smaller factor, so simply applying for a bunch of different credit accounts won’t have much of a favorable effect. But what these factors don’t tell you is what works the fastest. Let’s get to that next.
If you’ve ever applied for a small business loan before, you know just how crucial your credit score is. It’s probably the single most important piece of information on your business loan application. But the importance of your personal credit score goes beyond your business loan application. Your credit rating is important for any big financial move in your life.
Whether you’re taking out a mortgage, applying for an auto loan, getting a credit card, or securing a student loan… your credit score matters—a lot. And having a great credit score can save you thousands on your personal and business finances. On the other hand, a poor credit rating can really limit your financial options.
Fortunately, there are some proven ways to build credit fast, and it starts with monitoring your credit score carefully and often.
Your credit report is a summary of your borrowing and repayment history. Your report will show your credit score and details of your credit accounts and borrowing history. Every piece of information that’s used to calculate your credit score comes from your credit report. So it pays to know and monitor exactly what your creditors are seeing on your credit report.
Several websites, including Fundera, give you access to your credit scores for free. But in addition to your score, you’ll want to dig into your full credit report. By law, you’re entitled to one free credit report per year from each of the three credit reporting agencies. You can access your free reports at AnnualCreditReport.com.
Regularly reviewing your credit reports helps you figure out what’s weighing down your score and what you can do about it. For example, if your reports indicate that your credit utilization is too high, then you should rein in how much debt you’re using or ask for a boost in your credit limit. If your credit report shows that your late bills are weighing your score down the most, then you can put more effort into paying your bills on time.
In addition to getting a better understanding of your credit, checking your credit report will allow you to stay on top of any errors that might impede your efforts to build credit fast. Studies show that one out of five credit reports contain substantive errors in them. When you have an error corrected, you should begin to build credit quickly credit score. In fact, fixing an error on your credit report is arguably the fastest way to build credit.
Common errors on a credit report include the following:
If you spot an error on your credit report, there’s a formal dispute process that you need to follow. First, make sure there’s really a mistake. Just because you might be surprised by some negative information on your report doesn’t mean that the information is inaccurate. If the blip on your report did result from a misstep by the creditor or credit bureau, now’s the time to gather documentation to prove your case. This could be proof of payment or a correspondence related to the charge in question. Then, follow the credit agency’s instructions for filing a dispute online or via snail mail.
Once you’ve submitted your claim, you should hear back within 30 days. And if the dispute is resolved in your favor, the negative information will be deleted or corrected on all of your credit reports. You should see your credit score build and improve accordingly.
Consumer education writer and former attorney Janice Lintz shares her own experience with correcting credit report errors:
“Consumers should pull all three credit reports for free and go through them with a fine-tooth comb. A low score could be due to an error. Correcting the error can have a marked change in your score. My report showed a lien on my account which was not mine. My score shot up after removing the incorrect information. The next reporting cycle will show the effects.”
It might take a credit cycle—normally one month—for the bureaus to register the change and calculate the new score. Once you fix an error, follow through and make sure it’s corrected on all reports. Each bureau is required to inform the others about corrected errors, but it’s a good idea to be your own advocate.
Regular monitoring is the most effective way to build your credit score fast because you can identify what’s impacting your score and fix errors, which tend to be pretty prevalent. Being able to detect small changes to your credit report (and fixing them if need be) will help you boost your score quickly.
Here are other tips on how to build credit fast:
Credit cards are an excellent credit-building tool. If you don’t already have a credit card, getting one will help boost your score quickly—as long as you use it responsibly.
Normally, we recommend that small business owners get a business credit card to separate business from personal expenses. However, if your main goal is building your personal credit score, then you should consider a personal credit card. Most business credit card issuers don’t report to the consumer credit bureaus, unless your account is delinquent. So it’s preferable to get a consumer credit card, where the issuer will report positive payment activity and help build your credit.
Having one or two cards that you use responsibly can help show that you practice good borrowing behavior—and that you’re deserving of a higher credit score. With that being said, you don’t want to apply for a bunch of credit cards in a short period of time. This is typically an indicator of risky behavior to the credit reporting bureaus. In addition, you should make sure that you’re paying off at least the minimum balance on your monthly statement, and ideally more than that.
If your credit is very low, you can opt for a secured credit card. With a secured credit card, you have to put down a deposit to establish your credit line. The credit line is usually equal to the size of your deposit. For example, if you put down a $2,000 deposit, that’s what your credit limit will be. The credit card issuer will use that money in the event that you default, but if you always pay on time, they will return your deposit once you close the account and graduate to a regular credit card.
Though there’s no one best credit card to build credit fast, the Capital One Secured Mastercard is available even to people starting out with a credit score under 500 and provides them with an opportunity to demonstrate their creditworthiness and build credit accordingly.
Another fast way to build credit is by becoming an authorized user on a responsible person’s credit card account. Essentially, you can piggyback off of a creditworthy person’s responsible borrowing habits. If you are an authorized user on another person’s credit card, you don’t necessarily have to even use the card to build good credit. Every time the primary account holder pays back a bill on time, both their credit score and your credit score benefit.
Becoming an authorized user also instantly increases your available credit and reduces your credit utilization. That has a beneficial impact on credit score, since credit utilization accounts for nearly one-third of your score. Just be aware that it goes both ways. If the authorized user falls behind on payments, their credit score and your credit score will take a hit.
Credit builder loans are another answer to how to build credit quickly. These loans are designed for people who are starting out without a lengthy credit history and need a fast way to establish credit.
A credit builder loan is actually less like a loan and more like a savings account that helps you build a credit history. A bank or credit union will put a small amount of money in your account. Then, you pay that money back in small installments over several months. At the end of the term—which is usually six to 24 months—the bank will give you back the money, plus any interest that you’ve earned for interest-bearing accounts. By making all payments on time, you can quickly establish a credit history.
Asking for a credit limit increase is a great way to build credit fast. You can ask for a higher credit limit on a credit card or a personal line of credit, such as a home equity line of credit.
Asking for a credit line increase is generally pretty easy. For a line of credit, you can contact your bank to find out the process. Most credit card companies allow you to request a credit line increase via your online account, and many don’t even need to do a hard credit pull. That means your credit won’t even take a ding from a hard inquiry, and you’ll be left with more available credit. That’s a win-win situation for improving credit.
Certified financial analyst Lou Haverty saw his credit jump 100 points after increasing his credit limit:
“The simplest way to increase your score is by using less credit than you are provided in your line. I managed to increase my credit score by nearly 100 points in about six months by opening a new credit card, but not using the incremental credit.”
Once the credit becomes available to you, don’t rush to use it all up. Your spending power is greater now, but the key to building credit is minimizing the amount of debt you use out of what’s available to you. When you ask for a credit line increase but leave most of that credit untouched, you’re showing potential creditors that you’re not overly reliant on debt. And that’s definitely a good thing.
Focusing on building credit fast is completely understandable, especially if you’re trying to secure a loan for your business. But don’t lose site of building business credit as well. Just like you have a personal credit score, your business has a commercial credit score that measures your business’s responsibility as a borrower.
Along with good personal credit, business credit is the other piece to qualifying for loans and favorable terms. Equifax, Experian, and Dun & Bradstreet are in charge of creating business credit reports and assessing business credit scores. Simple steps, like opening a business bank account, getting a business credit card, and paying suppliers and lenders on time, can help you establish business credit and keep your business credit score high.
Start by looking up your business credit report and checking whether your company already has a business credit score. Then, you can take the appropriate steps to improve your score.
Check Your Business Credit Score
If your credit score isn’t where you want it to be, there’s a number of things you can do to improve it. Fixing errors on your credit report is an easy step to cross off your list. After that, consider getting a secured credit card or credit builder loan, becoming an authorized user on someone else’s credit card, or asking for a credit line increase. All are effective ways to build credit fast.
But ultimately, there isn’t an overnight solution to building credit. We know this is easier said than done, but you have to regularly pay bills on time to keep your credit high. This requires financial discipline—you need to spend conservatively on business and personal needs, to have enough money left over to pay your bills.
Once you implement the quick fixes and the longer-term strategies, you’ll be able to increase your credit score and keep it high.