Bad or no credit? How to Build Your Credit Score Quickly


Credit report form on a desk
If you’re just starting to build a credit history or want to quickly restore a less than ideal score, you can take action now.

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Some Americans may not realize the key role a credit score plays in buying a home, taking out a loan, or even applying for a credit card until they know it. are trying for the first time.

If you’re just starting to build a credit history or want to quickly restore a less than ideal score, there are key facts and tools you can use now to improve your situation.

After all, no or weak credit can be detrimental in various ways. That’s why it’s so important to establish good credit — and fix bad credit — as soon as possible.

Here’s how you can get started today.

What is a good credit rating?

First, it’s important to know what’s on your credit report. Get your free credit report, check for errors and dispute incorrect information. You can use a template from the US Consumer Financial Protection Bureau to draft your dispute.

You usually won’t know in advance when someone reports something negative to the rating companies. This is why accuracy and completeness are very important when it comes to establishing good credit.

Here is the credit scoring report scale for FICO:

  • 580: Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very well
  • More than 800: Exceptional

If your credit score is in the lower range, you’ll want to start working to improve it right away. Several companies are ready to help you.

3 easy ways to boost your credit score

1. Apply for a secure credit card

A secure credit card is backed by a deposit. The issuer will generally ask for a deposit between $50 and $300. Then you get a line of credit for that amount. For example, if you deposit $100, your credit limit will be $100.

Use the secured credit card as you would a regular credit card, but try to pay the balance each month. The secure credit card issuer then reports your on-time payments to the three major credit score companies mentioned above. As you build a record, your score may improve.

2. Get a co-signer for a loan

The same principle applies if you ask someone with a good credit history to co-sign a loan. As with any co-signing situation, make sure the person knows they are fully responsible for on-time payments. Choose someone with an excellent credit rating.

3. Become an authorized user

Another way to establish a credit history is to become an authorized user of someone else’s credit card. Typically, a friend or family member adds you as an authorized user to their credit card. But make sure that this person also makes the payments on time.

What if I don’t have credit?

Consider the steps listed above, like becoming an authorized user on someone else’s card or applying for a secured card to start building your credit history. It takes time (and on-time payouts), but if you’re diligent, you’ll get a good score sooner than you think.

What Impacts Your Credit Score?

Your payment history and the amounts you owe represent more than two-thirds of your FICO Score, a company that calculates if you are a good credit risk. VantageScore, another compilation service, also takes this into account.

Other factors include how long you’ve been using credit and the variety of credit you use, such as mortgage, car loan, credit cards, and other types of accounts. The longer your history and the more diverse your credit types, the better your score. Scores also include how often you request credit. Frequent applications can reduce your score.

If you’re ready to start improving your credit score, there are companies ready to help.

I do not know how calculate your score? You can get a free current report once a year from each of the three major credit rating companies – Equifax, Experian and TransUnion. FICO and VantageScore use a mix of information from all three companies to calculate your score.

Why is it important to have a good credit score?

With a high credit score, you’re more likely to get a better interest rate or better terms when considering borrowing money. It can save you thousands of dollars over time.

Lenders look at a credit score to decide whether to approve home, payday, personal, title, auto, student and small business loans, security deposit financing, credit cards and purchase plans immediate and subsequent payment.

A good credit rating isn’t just important for borrowing money. A wide range of other institutions also take this into account. Here is a short list of people who can view your credit score:

  • Owners
  • potential employers
  • Insurance companies
  • Banks, credit unions and payment processors
  • Retailers that accept personal checks
  • Hire-purchase dealers
  • Short-term and payday lenders
  • Communication and utility companies
  • Any company that grants personal credit
  • Buy-it-now, pay-later (BNPL) companies

Building an on-time payment history can give you access to credit when you need it most. With a good credit score, you’ll also have an easier time buying a house, car, or other big purchase.

Which is worse, bad credit or no credit?

If you don’t have a credit history, lenders will be suspicious because they don’t have enough information to show that you’ll make payments on time, even if you have a regular income.

Credit reports typically don’t include some important expenses like rent payments, so lenders can’t properly assess creditworthiness even if you have a record of on-time rent payments. Payments for utilities and telecommunications are also generally excluded.

With little or no credit, you may have to pay down payments on utilities like gas or electricity. You can also benefit from higher interest rates for loans. You will also be less likely to be approved. The good news is that you can start building a good credit report right away.

Bad credit is generally considered a poor FICO score or less than 580 (see scale above). Lenders will view you as a risk. You’ll struggle to get approved for credit, you’ll likely have to pay higher interest rates on loans and credit cards, pay higher insurance premiums, have trouble renting an apartment, and even be obliged to pay a deposit for utilities.

Negative information stays on credit reports for about seven years. This may include accounts sent to collection agenciesmissed payments, late payments or payments not made as agreed and bankruptcy.

There is, however, good news. This year, most medical debt will be removed from credit reports.

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