How to Build Credit Fast With 5 Easy Tips.

By Devyn Hill – Universal Lender

It’s incredibly important to have good credit. Chances are, at some point you’ll need a solid credit history to obtain a loan, car lease, housing, favorable interest rates and more. But how can you actually start building credit to strengthen your financial future? We’re here to walk you through a number of different ways you can go about it.

The Case With Credit.

In a nutshell, your credit history is a reflection of how you’ve managed money and debt in your past, and your credit score is tracked and analyzed by the three major credit organizations: Experian, Equifax and TransUnion. It’s essentially a way of gauging your likelihood of repaying debts on time and (at least) with the minimum payments.

1. Consider a secured credit card

   If you’re new to building credit, it often helps to get set up with a secured credit card (or a “starter credit card”) – that is, a card that’s backed up by a cash deposit you make up front. The deposit amount is typically the same as your credit limit.

   For one, secured credit cards are convenient to use. They’re also relatively easy to qualify for! The more you use a card to buy things and pay your bills on time, the more your credit will improve. The goal is to eventually qualify for an unsecured credit card that comes with better benefits and doesn’t require a deposit at the beginning.

   Note: Avoid applying for multiple credit cards in a short amount of time as this can hurt your credit in the big picture. The same goes for closing an account – unless you have a good reason to do so, such as to avoid high fees, keep it open. In the eyes of lenders and other third parties, this will increase your average account age.

2. Look into a credit-builder loan

   Credit-builder loans are exactly what they sound like! Relatively easy to qualify for, they’re uniquely designed to build credit, and are a great way to help create good payment habits. These loans are often small – usually between $300 and $1,000 – with a term of six to 24 months. The general idea is that a lender will use your bank account as collateral for the amount you owe until you pay back the loan.

3. Find a co-signer

   Another helpful way to build credit is by having a co-signer for certain loans, with the co-signer being responsible for the full loan amount in the event you’re unable to pay it back. A joint account is a similar option, with you and the other person being equally responsible for paying back the loan.

4. Become an authorized user

   Similar to having a co-signer, you can become an authorized user on a family member’s or significant other’s credit card to build credit. By doing so, that card’s payment history will be applied to your credit history. As an authorized user, you’ll have zero liability, so it’s a low-risk option.

   The point is to find a primary user you can piggyback off of who is good about paying their bills on time and at least making the minimum payments. Make sure you both agree on what you’ll use the card for – and how much you’ll spend – before taking this route.

5. Don’t overspend

   A common misconception is that you need to make large purchases and immediately pay them off to increase your credit score. With a credit card, for example, it’s OK to use it to make multiple smaller purchases. Every little bit helps! And on a similar note, if you can avoid maxing out your credit each month, it suggests to future lenders and others that you’re not a risky borrower, thus increasing your creditworthiness.