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All right, now that you understand how credit works, let\u2019s explore the nuts and bolts of building your credit score.<\/p>\n
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The credit bureaus process billions of transactions every single day<\/em>.<\/strong> You\u2019re smoking crack if you think they don\u2019t make mistakes all\u2026 the\u2026 time.<\/p>\n And look, it\u2019s not their responsibility to ensure your credit report is accurate. It\u2019s yours.<\/p>\n So, check your credit report for errors before you do anything else. Once a year, you can pull your credit report for free from AnnualCreditReport.com<\/a>\u2014it\u2019s mandated by federal law.<\/strong><\/p>\n While it\u2019s free once a year, it\u2019s not a complete credit report. It doesn\u2019t include your credit score and isn\u2019t particularly user-friendly. And once a year isn\u2019t enough if you\u2019re looking to build good credit.<\/p>\n Fortunately, you can run your own credit report<\/a> (and other background checks) using the tenant screening feature in our landlord app<\/a>. Depending on whether you\u2019re using a free or premium account, the report costs between $9 and $15 and includes your credit score and complete credit history.<\/strong><\/p>\n What do you look for when you pull your credit report? Look first for accounts that aren\u2019t yours or accounts that should be reported but aren\u2019t.<\/p>\n Next, look for incorrect late payments. If you paid on time, but your payments are showing as late, you need to contact the credit bureaus to let them know.<\/strong><\/p>\n Lastly, look for any negative public records (bankruptcies, liens, foreclosures, etc.) that aren\u2019t yours.<\/p>\n Credit bureaus make mistakes, and you must fix them if you want to build your credit.<\/strong><\/p>\n \u00a0<\/p>\n Yes, many people abuse credit cards. In fact, the average household credit card debt is up to $6,295 <\/a>\u00a0as of the end of 2023. Ugly.<\/strong><\/p>\n But to establish your credit history, you need to have some credit records reporting. As a first credit card, don\u2019t expect to be approved for the ritziest cards with the best rewards. Your first priority is building credit, not rewards.<\/strong><\/p>\n If you get turned down for a traditional credit card, you have two options:<\/p>\n Secured credit cards require a deposit from you as collateral against default. If you fail to pay them, they just take the collateral. Then, they ruin your credit by reporting your default to the credit bureaus.<\/strong><\/p>\n Use your credit card sparingly. As a first credit card, just put one recurring monthly bill on it and set up recurring monthly payments to your card to cover it.<\/strong> That way, it\u2019s all automated, and you don\u2019t even need to remember to pay for it.<\/p>\n Later, you can get fancy, like using your credit cards to buy real estate<\/a> or score free travel, but right now, you just want to establish a credit history to build credit fast.<\/p>\n \u00a0<\/p>\n One alternative to having someone else cosign your credit card is becoming an added signer on someone else\u2019s credit card.<\/strong> The credit bureaus report the card balance and payments on your credit history, too.<\/p>\n Just make sure the person is responsible about paying their card on time every month, and don\u2019t use them unless you have their express permission. Building your credit isn\u2019t worth ruining relationships over!<\/p>\n \u00a0<\/p>\n One credit card isn\u2019t cut it when you\u2019re looking to build credit quickly.<\/strong> Remember, part of your credit score calculation is based on your mix of credit accounts.<\/p>\n So, open a credit builder loan as another type of credit account. \u201cLoan\u201d is a misleading term, as you\u2019re the one who\u2019s lending the money.<\/strong> It works like this: you agree to make a series of payments over a certain period, say $40 monthly for 18 months<\/strong>. The \u201clender\u201d reports your payments as on time throughout the loan, and you get your money back at the end of the loan term.<\/p>\n Well, most of it, anyway. They keep a little for the trouble of reporting your payments to the credit bureau. There is no such thing as a free lunch, after all!<\/p>\n But as you look for how to build credit fast, credit builder loans offer another tool in your kit.<\/p>\n \u00a0<\/p>\n Diversifying your credit accounts can be a good way to increase your credit score. The reason is self-explanatory\u2014if you can juggle multiple credit lines simultaneously without dropping any of them, you demonstrate the type of financial responsibility lenders want to see.<\/strong><\/p>\n Here are some of the different credit types you can try:<\/p>\nStep 2: Get a Credit Card If You Don\u2019t Have One<\/h3>\n
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Bonus Option: Become an Authorized Signer on Someone Else\u2019s Card<\/h3>\n
Step 3: Get a Credit Builder Loan<\/h3>\n
Step 4: Diversify Your Credit Types (To A Degree)<\/h3>\n