As I discussed in our previous post, every person needs credit at some point in life. Here, in this post, I will teach you how to build credit fast in four very easy and simple steps. This is the method I use to help my clients build credit. I used it many times and it always worked. Just make sure to be motivated and follow the steps exactly as written.
Get one of your parents, friends, or spouse etc. to add you as an authorized user to one of their credit cards from one of the following four banks: Discover, Us Bank, Barclays Bank, Bank of America (Citi and Capital One may also work, but not as well as the others). Adding you to their credit card will not have any effect on their credit.
Very important: Make sure the card that you get added to has all of the following requirements:
- Card is at least two years old
- Card does not have a high balance
- Card was used within the last three months
- Card never ever had any late payments
When being added as an authorized user try to use your own address not the primary address as the address used will be the address that will show up on your credit report.
Wait ‘till the authorized user shows up on your credit reports (this usually happens on about the same date as the statement prints.) You can track that very easily on Credit Karma.
Once the card shows on your credit reports, then go ahead and apply for a Discover It or Capital One Journey credit card. You should get approved for one of these credit cards without a problem. Once you got approved, use the card for a minimum amount each month.
(Once you get approved for your first card, I recommend removing yourself from being an AU on someone else’s credit card, as any late payment or high balance may have a significant impact on your credit report. Read this post on how to properly remove yourself from being an AU.)
Wait six months and then apply for another credit card which does not have an annual fee and is easy to get approved for. You can check out a list here. Make sure you get approved for a second card and again use both credit cards for a minimum amount every month.
(The reason why I recommend choosing a card that does not have an annual fee is that you will want to always keep these cards open, since the longer you have them open, the better your credit will be. So, without needing to pay an annual fee every year, you won’t ever need to worry about keeping the card open.)
Wait another three months and then apply for a third card which also does not have an annual fee.
Now, after another three months, your credit should be 720 plus!!!
Building credit may take some time (one year in total) but once you have it, it’s yours as long as you will keep your accounts in good standing.
You may also want to read: The 5 Most Important Factors In A Fico Score.