7 Steps to Build your Credit Score FAST!!!
By Turtle Credit Team
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We’ve been discussing credit and how it works but how do you start getting credit if you have no credit history? Better yet, how do you repair a bad credit history? Yes, It can be done! Because everyone – including most Billionaires, had to start with their credit card or a loan.
So, let’s get going with these “7 Steps to Build your Credit Fast”! Following these steps will guide you in obtaining “your” perfect credit score. Some of you may already be on step four; and some of you may just be beginning. Either way, doing all seven steps will build your credit and empower your financial future.
Build your Credit Score
Step 1. Become an Authorized User
Becoming an authorized user means a cardholder has allowed you to make purchases on their account. However, the cardholder doesn’t have to give you a card to make purchases. Once you’re an authorized user, the entire account history is added to your credit report and is factored into your credit score (Tip: Make sure they have great credit). I advise all parents to help their kid’s financial future by adding them as an authorized user. So, by the time they have reached 18 years of age, they have already completed step one.
Step 2. Establish Revolving Credit
30% of your credit score is determined by how you use your revolving credit. Revolving credit lines include credit cards, charge cards, and line of credits. The best way to establish revolving accounts is to apply for a credit card with a bank or credit union you already have a relationship with. If you do not qualify for an unsecured credit card, apply for a secured credit card to improve your odds in being approved.
Pro Tip – Use your credit card for fixed expenses such as phone bills, power bills, and cable bills. This is an excellent way to manage your monthly payments.
Step 3. Establish Installment Credit
To achieve a perfect credit score, you must have both revolving and installment accounts on your credit report. Your credit mix makes up 10% of your credit score. Installment accounts are any fixed payment loans such as auto loans, home loans, and personal loans.
Pro Tip – Don’t need a loan but want to build Installment Credit? Use companies like “Self-Lender” where you can build your savings and build your installment credit via a credit-builder account.
Step 4. Use Less than 30% of your Revolving Balance
Your payment history determines 35% of your credit score. Also, how you utilize your credit limit, determines 30% of your credit score. One credit hack is to keep your credit utilization below 30%. If you want to be a credit Rockstar, only use 10% of your credit limit. Use this one simple tip and watch your credit score sore!
Pro Tip – Having a hard time paying down your balance? Use apps like “Tally” by Tally Technologies, Inc. Tally is a financial app that helps you organize and pay off your credit cards in the most optimal way. Tally makes it easy to save money, manage your cards and pay down balances faster.
Step 5. Ask for Credit Limit Increases
I know how hard it is to only use 10% of a $300 credit limit – that’s only $30 of use! Keep up that hard work for six months and then ask for a credit limit increase. Usually, when you ask for a credit limit increase, they don’t do a “hard pull” on your credit report. So, don’t worry about the soft inquiry hurting your credit score.
Pro Tip – Call your credit card company; ask for a limit increase and let them know why you need a limit increase; and be KIND! When speaking to someone over the phone, there is a human factor that can help you gain a higher limit.
Step 6. Dispute Inaccuracies on your Credit Report
According to the Federal Trade Commission: 1 in 5 Americans have a mistake on their credit report. Those mistakes could be costing you a higher credit score. Check your credit reports with CreditKarma.com and Experian.com. You can file disputes directly in both the CreditKarma and Experian apps.
Step 7. Pay on Time and Watch your Score Grow.
As the old saying goes, “Father Time is undefeated.” 15% of your credit score is determined by the length of time you have had your credit account. That said, continue to pay your bills on time and watch your credit score grow.
Pro Tip – Monitor your progress on all three credit bureaus with CreditKarma and Experian apps.
Final Thoughts
Following Turtle Credit’s 7-steps will help you build your credit to finance your dream home, get the car you want (and pay less for the one you didn’t want), get approved for a premium credit card and possibly a line of credit.
Finally, expanding your financial literacy knowledge in credit will empower you to leverage your income, manage money more effectively and live your best life!
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Articles: Personal Credit 101
So, what is credit? Well, it’s sort of like trust. It’s when a Company or Bank trusts you enough to lend you money to buy things such as clothes, a car and even a house.
So how does credit actually work? It’s kind of like dealing with friends. You can lend some friends’ money and they will return it on an agreed-upon time.
If credit is borrowing money on trust, how can you also save money when borrowing money?