How to Build Credit Quickly

A quick guide to building a strong credit score 🚀

An image of The Cleo Credit Builder Card with "How to build credit quickly" written on the top.

The What and Why of Credit

We've all heard the term "credit score" thrown around, but do you know what it really means? If you don't, we're here to give you the low-down 💖

Essentially, your credit score is a three-digit number that lenders use to decide how likely you are to repay your debts. From getting approved for a mortgage to how much interest you pay on a loan, this little number carries a lot of weight.

So, if you're looking to build credit fast, you're in the right place 💡

Understand Your Credit Report

Before you can build credit fast, you need to understand your credit report. This document records your credit history - loans, credit cards, payment habits, you name it.

You can get a free credit report once a year from the three major credit bureaus - Experian, TransUnion, and Equifax. Take a deep dive into your credit report and check for any errors. Mistakes happen, and if they're on your report, they could be pulling your score down.

Understanding your credit report is important for a variety of reasons:

🔎 Spot Errors: Your credit report is a detailed record of your credit history, compiled by credit bureaus. Errors can sometimes happen, like mistakenly reported late payments, or even more serious issues like identity theft or fraud.

If you regularly review your credit report, you can spot and dispute these errors, which can help to protect and improve your credit score.

🔎 Know Your Position: Your credit report gives you an understanding of where you stand credit-wise. It provides information about your credit accounts, their status, your payment history, and how much debt you owe.

This information can help you create a plan if you want to improve your credit score, apply for a loan, or make any major credit-based decisions.

🔎 Monitor Your Progress: If you're working on improving your credit score, your credit report acts as a progress report. You can see the impact of good credit behavior and where you might need to adjust your habits.

🔎 Understand Credit Score Factors: Understanding your credit report also helps you understand how credit scores are calculated. You get to see how your debt amount, payment history, credit age, account types, and credit inquiries play a role in your overall credit health.

🔎 Preparation: If you plan on applying for credit (like a mortgage or a car loan), reviewing your credit report beforehand can give you an idea of whether you're likely to be approved. It can also help you understand what kind of interest rate you might qualify for.

So, getting familiar with your credit report is an essential step in maintaining and improving your overall financial health.

Check out How to Get a Free Credit Report for more tips 🗒️

7 Top Tips for Building Credit

1) Get Your First Credit Card

This might sound slightly odd but hear us out. One of the best ways to build credit fast is to get a credit card. But here's the catch - it's not about getting the card and splurging on a shopping spree. It's about how responsibly you use it.

Try to only use a small amount of your available credit each month and pay your balance off in full.

PSA: If your credit is poor right now and you can't get a credit card without a ridiculous APR, we've got an alternative. Keep scrolling to find out how The Credit Builder Card could help you 💙

2) Pay Bills On Time

Your payment history contributes significantly to your credit score. So, whether it's a small utility bill or a big student loan installment, make sure to pay on time, every time. To build credit fast, consider setting up automatic payments or reminders.

3) Maintain Low Credit Utilization

"Credit utilization" might sound like a mouthful, but it's pretty straightforward. It's the percentage of your total credit limit that you're using. If you have a credit card with a $1000 limit and you use $500, your credit utilization is 50%. To build credit fast, aim to keep this number below 30%.

4) Limit Hard Inquiries

Whenever you apply for new credit, the lender usually performs a "hard inquiry" into your credit history. While one or two won't hurt, too many hard inquiries can lower your credit score.

5) Diversify Your Credit

Here's a tip to build credit fast that often flies under the radar – diversify your credit types. Lenders like to see a mix of credit, like installment loans (like a car loan), credit cards, and retail accounts. This shows that you can handle various types of credit responsibly.

6) Become an Authorized User

Here's a neat little hack to build credit fast – ask if you could become an authorized user on someone else's credit card. As an authorized user, you get the benefit of their good credit habits. Remember, be responsible and choose someone responsible - their missteps can also negatively impact your credit score.

7) Consider a Credit-Builder Loan

Credit-builder loans are just what they sound like – loans designed to help you build credit fast. You borrow a small amount, it's held in an account for you, and you make payments towards it. Once the loan is paid off, the money is yours, and you have a nice boost in your credit score.

Looking for an Alternative? Meet The Credit Builder Card* 💳

With the Credit Builder Card, you’re in charge of deciding how much money you want to spend. The money you add to your card’s security deposit then becomes your credit limit (you'll just need to add a minimum deposit of $1).

For example, if you add $50 to your security deposit and spend $50, that’s it. It’s really hard to go over 💸

And with our auto repayment option, it’s all set up so it’s almost impossible to miss a payment.

‍How can the Credit Builder Card help build your credit?

Cleo reports your payment history to the credit bureaus and over time, on-time payments may help your credit score.

And if you select the ‘carefree credit building’ option, your payment will automatically be applied so you never have to worry about missing it.

Patience is Key

This stuff takes time and your credit score won't skyrocket overnight. These steps will help you build credit fast, but "fast" is relative. It's about consistent, responsible financial behavior. Keep tabs on your progress, keep learning, and before you know it, you'll have a credit score that lenders will approve of 🙌

*The Credit Builder Card is issued by WebBank, Member FDIC pursuant to a license from Visa USA Inc. Access to the Card is subject to approval

Still have questions? Find answers below.
What is a credit score and why is it important?
How can I check my credit report and why should I?
What are the top tips for building credit fast?
What is The Credit Builder Card and how can it help me?
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