Key Takeaways:
- Using a secured credit card, a credit builder loan, or becoming an authorized user can help you establish credit fast.
- Paying your bills on time affects your credit score more than any other factor.
- It generally takes several months to establish your credit score.
Having strong credit can make your financial life easier. With a high credit score, you usually have your pick of the best loan offers with low interest rates and a higher chance of approval. Plus, you can qualify for rewards credit cards that help you earn cash back and travel points.
But what if you’re just starting your credit journey? Is there a fast way to increase your credit score?
Below, we’ll discuss how to establish credit fast, including steps like using a secured credit card, becoming an authorized user, and always paying your bills on time.
Tips for establishing credit fast
1. Apply for a credit card
A great way to start building credit is by signing up for a new credit card. At first, you might have limited options, but there are credit cards designed to help you build credit fast.
Some options to consider when you’re just getting started include:
A secured card
A secured credit card may be the best path forward if you’re trying to establish credit as a beginner. Secured credit cards are designed for borrowers with poor credit (or no credit at all). You’ll typically need to make a small security deposit as collateral, and then you can use the credit card for everyday purchases.
Get started with the Chime® Credit Builder Secured Visa® Credit Card. It comes with no annual fees or interest¹, no credit check to apply, and no minimum security deposit required.²
Student credit card
If you’re a student, consider applying for a student credit card. These cards can help you build credit if you have minimal credit history or you’re starting from scratch. You can use it like a normal credit card, but it often comes with lower credit limits.
To build credit fast, avoid maxing out your student credit card and aim to pay your bills on time each month.
2. Become an authorized user
Becoming an authorized user on a credit card is another way to start building credit. A trusted family member or friend can add you as a user to their card. Their responsible usage – low credit utilization and on-time payments – reflects on your credit report.
That means you can demonstrate responsible credit card management without opening a credit card yourself. That’s helpful if you’re aiming for a quick credit jump – opening a credit card temporarily lowers your score.
Becoming an authorized user means you have the potential to affect someone else’s finances. You’ll get your own card to swipe as you please, but the primary account holder is responsible for the payments. Be respectful as an authorized user. Ask before using the card, and pay your loved one back right away.
3. Get a loan
Taking out a loan can also help you to start building credit. You have a few different options, including:
- Secured personal loan. A secured loan requires you to put forward an asset as collateral, such as your house, boat, or car. Making on-time payments can help you build your credit. If you can’t repay your loan, the lender can take possession of your collateral.
- Credit builder loan. Instead of a lender issuing you a lump sum of money like a personal loan, with a “credit builder” loan, you pay the lender in monthly installments plus interest. The lender deposits these payments into a savings or certificate of deposit (CD) account. Once you finish paying the installments, you get access to the money. Your payments are reported to the credit bureaus, which can help you establish your credit.³
4. Pay your bills on time
Credit where credit is due
Building credit takes time. While we’ve highlighted a few habits to improve your credit score faster, like getting a secured credit card and becoming an authorized user, establishing credit is a process. In time, you’ll have your credit score in a healthier spot, making it easier to finance life’s big purchases.
Ready to start your credit journey? Here’s everything you need to know about how Credit Builder can help you establish credit fast.
Establishing Credit FAQs
How long does it take to establish credit?
How long it takes to establish credit from scratch depends on which credit score you use. With FICO, it can take about six months, and you’ll need to have one open credit account, like a credit card or loan, that reports to at least one of the major credit bureaus.⁵ With VantageScore, you can establish a score as soon as your first account is reported to the credit bureaus.
Can you establish credit with a debit card?
No, you generally can’t establish credit with a debit card. When you use your debit card, you’re withdrawing money from your checking account. You aren’t borrowing money, and your debit activity isn’t reported to the credit bureaus.
Does paying rent build credit?
It is possible to use your rent payments to build credit.⁶ To have positive rental payments reported to the credit agencies, you can ask your landlord if they participate in a rental reporting program.
Payment history accounts for 35% of your FICO® credit score.⁴,† That means on-time payments impact your credit more than any other factor.
If you have late payments on your credit report, you won’t be able to get those removed (unless they’re an error). But here’s how to avoid late payments going forward:
5. Reduce your credit utilization
Credit utilization is the amount of available credit that’s in use. It accounts for 30% of your credit score.⁴ By reducing the amount of available credit you use, you can lower your credit utilization and raise your credit score.
Here are two simple ways to reduce your credit utilization:
6. Treat your credit card like a debit card
With a credit card, you can swipe freely up to your credit limit, even if you don’t have the money in the bank. If you can’t afford to pay off your card in full, you’ll begin to carry a balance.
This means you’ll start accruing high-interest credit card debt, and your credit utilization will be higher than if you’d paid off the card in full.
When you use your debit card, the money is taken from your checking account. You typically can’t complete the transaction if you don’t have the funds.
To establish good credit, treat your credit card like a debit card. Only use it for purchases you can afford and aim to pay it off in full each month.
7. Pay your utilities
You’re likely paying regular monthly bills like your phone, rent, or other various utilities. Unfortunately, you’re probably not getting credit for making those payments on your credit report.
If you apply for Credit Builder, you can earn credit just for paying your regular bills on time. Instead of paying your monthly bills out of your checking account or with cash, use Credit Builder instead.
At the end of each month, Chime reports your on-time payments to the major credit bureaus. Consistent use can build your credit and payment history and create more credit diversity in your report.