How To Build Credit Quick: 5 Hacks To Fatten A Thin File
The U.S. heavily relies on credit. It’s possible to get by on cash but not practical because most people don’t have the cash to buy high-dollar items like vehicles and homes. Credit is also important for things like renting an apartment and, in some cases, landing a job, so building credit quickly is a priority for those new to the country and young people starting their adult lives.
We’ll explain what information is contained in a credit file, why you need a credit history, and 5 fast ways to build credit.
What’s in a credit file
Your credit history or credit file contains information about consumer accounts. The information is compiled by the three main credit bureaus, TransUnion, Experian, and Equifax, who use the information to create your credit score, a number between 300-850. The higher your credit score, the better.
Your credit report contains:
Number of credit accounts
Types of accounts (revolving or installment)
Account balances
Payment history
Negative marks (late payments, missed payments, bankruptcy, judgments, liens)
Why credit is important
When you apply for a credit card or a loan, an apartment, or in some cases, a job, the entity or person who may extend those things to you wants to know how likely you are to pay your credit card bills on time, pay back your loan, pay your rent on time, or in the case of some jobs, how trustworthy you are handing money or sensitive customer financial information.
One of the resources they use to determine that is your credit history which they buy from one or more of the credit bureaus.
A healthy credit score is important because it determines the interest rates you’re offered when you borrow money from a bank or credit union. The lower your interest rate, the more you save over the life of the loan, as the interest charge is the cost to borrow that money.
How to gain credit fast
Building credit quickly is possible! It takes three to six months of regular credit activity to have enough data for the credit bureaus to calculate the information into your credit score. Before you have accumulated that activity, you have what’s known as a thin credit file.
A thin credit file is not the same as bad credit. Bad credit means you have a history of late payments, have high credit card balances, or have negative marks like accounts sent to collections or bankruptcy.
Here are 5 ways to build credit fast:
Sign up for Experian Boost. The service reports payments not typically reported to credit bureaus giving you additional on-time payments. Payment history is the most significant factor in your credit score, so this can really help!
Open a credit card or a secured credit card.
If you can’t qualify for a credit card on your own, become an authorized user on another person’s credit card.
Take out a credit builder loan.
Let Upwardli help! We can help build or improve your credit and connect you with financial service providers who understand the needs of those with thin credit files and are willing to work with them.
Building credit is not a mysterious, time-consuming, or lengthy process, You can start today, and within a few months, you’ll be on your way to having a credit history and a credit score!
