How to Build Credit From Scratch Fast

A few tips show that you can build credit quickly.

Building good credit from scratch can seem complicated yet it is important to your financial stability. A good pay history with credit cards can help you qualify to buy a house and get a car if you use credit wisely. Lenders need to see responsible credit history to approve loans. Some people use their spouse's strong credit history to build credit. Some use secured credit cards with cash to develop a credit history quickly. There are several methods to build credit. No single method is right for everyone.

Instructions

1. Piggyback on a relative's credit card account. Simply ask a spouse if he can add you to his account. Ask your parents if they can add you to their account. Your credit score may likely improve over time with their good habits.

2. Apply for a credit card from a major retailer, department store or gasoline company. These cards are simple to get but you only need one or two. Pay off your balance in full each month to establish a positive record.

3. Apply for a secured credit card that you establish with a cash deposit. Take out a couple secured credit cards to begin a credit history. Just double check that the secured credit card will be reported to the credit bureaus.

4. Use credit instead of cash. Build credit by showing that you use credit responsibly. If you only use cash, creditors can't examine your credit history.

5. Apply for a major credit card. Spend wisely and pay your bills on time and in full. Then after a few months ask for a credit limit increase. A large credit limit shows lenders that others think you are responsible but beware of multiple accounts with unused credit limits.

Tips & Warnings

• There is no need to carry a balance on your credit card. Carrying a balance creates interest and makes the card more difficult to pay off in a timely manner.

• Don't piggyback on someone's account if he has poor credit. Also don't misuse a credit card if someone puts your name on his account.

• Creditors are wary of individuals with large unused lines of credit on their credit cards and other accounts.

• Beware of credit repair agencies and companies who overpromise to help you establish or rebuild your credit. Credit repair companies cannot make you pay for services until they complete what they promised, according to the Federal Trade Commission.

References

• Real Estate: 10 Ways To Boost Your Credit Score
• Two Wise Acres: Piggyback Credit Histories to Increase Your Credit Scores
• MSN Money Central: Nine Ways to Build Credit From Scratch

Resources

• Credit Repair: How to Help Yourself
• Request Your Free Credit Reports
• 5 Steps to Do-It-Yourself Credit Repair