How to Establish Credit Fast

Establishing a good credit score is important. Whether you have no credit and are seeking to build it up or have bad credit and need to improve upon it, there are some very active steps that you can take in establishing credit fast.

Things You'll Need

• Secured Credit Card
• In Store Credit Card
• Cell Phone
• Checking Account
• Savings Account

Instructions

1. Obtain a secured credit card. You will be required to send in a deposit to secure the credit card. The amount usually varies from $250 - $500. Keep a small balance at all times on the card. You must make your payments like clockwork to make this work in your favor. These payments are reported and will increase your FICA score.

2. Get a cell phone with a service agreement. By making your payments regularly, you can build your credit this way. Other utilities in your name can work in your favor as well.

3. Open a checking account. This is the first thing most lenders want to see proof of. Never, ever bounce checks.

4. Keep a savings account. Be certain that you keep in active with deposits and don't just let it sit stagnant. If your savings is large enough, you may even be able to secure loans without them even looking at your credit report as this could be considered collateral.

5. Take out bank loans against cash you already have in your savings account. Get one which does not penalize for prepayments. This way you can pay off *nearly* the entire loan, leaving you with a smaller monthly payment. Again, make this payment without fail and it will look great on your credit report. Repeat this with a variety of banks to increase the effect even more.

6. Open up an in-store credit card. These are generally easy to obtain. This gives you another source of good credit on your credit report. Just be certain that they report to the credit bureaus or it won't do your credit any good.

7. Keep any loans you have paid down to a minimum principle balance while still keeping them open. When you apply for a loan or credit card, they look at your debt to income ratio. Having small balances helps the debt side of things. But keeping them open, you continue to build good credit.

8. Take out a small personal loan if you have several items on your credit report. Use the loan to pay these off. Negotiate with the creditors first. Most will lower the balance you need to pay in order to be paid off in full in one lump sum. Don't be afraid to bargain down to half the principle balance, or even less.
   Be sure to visit the link in the resources section below this article to learn more.

Tips & Warnings

• Always keep tiny balances on any loan or credit card.

• Consider setting up automatic payments, when possible. The timely nature of your payments is a big key in building credit.

Resources

• The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey
• The Total Money Makeover Workbook by Dave Ramsey