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How to Build Credit Fast

Beverly Harzog

If you need to build credit fast -- or rebuild it after a financial fiasco -- you're in the right place.

You've probably heard that you need a long credit history (a trillion years, at least) and a whole slew of credit lines to have an "exceptional" credit score, which is 800-plus. Honestly, it does take a while to get an exceptional score, but right now, that shouldn't be your focus.

At this moment, your goal is to boost your credit as fast as you can. If you stick to a few rules, you will increase your credit score within the next few months.

The Basic FICO Facts

It can feel daunting to build your credit from scratch, but I promise you, it can be done. It just takes time and patience.

Here are the minimum requirements for a FICO score:

-- You need to have one account open for at least six months.

-- Your account needs to be reported to the credit bureaus within the past six months.

-- You need to make sure there's no sign that you're deceased.

OK, the last bullet point sounds a little comical, but there's a reason it's listed. If your account was shared with someone who died and who was reported as deceased, then this could affect your account. If possible, try to open an account in your own name.

With VantageScore, another consumer credit scoring model, you can generate a credit score with less than six months of credit history. But you have no control over which score a lender will request. There's always the chance you'll get lucky and your lender will use VantageScore. But be prepared for a six-month wait since 90% of lenders use FICO scores.

[Read: Best Secured Credit Cards.]

Ways to Build Credit Fast

Remember, you're looking for ways to break into the credit world, so don't worry about your low -- or nonexistent -- FICO score. The goal right now is to take steps to remedy your credit situation.

Here are a few ideas to get you started:

Get a secured credit card. With these cards, you make a security deposit, which often becomes your credit limit. You get a credit card that looks just like an unsecured credit card. As long as the issuer reports to the bureaus and you use the card responsibly, you'll build a good credit history.

These cards are fairly easy to get, but if you're rebuilding your credit and you have a lot of negative items on your credit report, it's possible to get turned down. If this happens, there are a few decent secured cards that don't do credit checks. But be sure you read the fine print, because there are also predatory lenders out there who target consumers in your situation.

Apply for a credit-builder loan. If you're uneasy about getting a secured credit card, then a credit-builder loan is a good option. Your score won't matter. But you do have to show proof of income so that you can make payments.

Here's how it works: You apply for a loan (with payments you can afford), and when approved, you deposit the amount you "borrowed" into a savings account. You then make monthly payments until you've paid off the amount. (There are variations in which you don't have to make a deposit.)

When it's paid off, you get your deposit back, plus a little interest. These loans are more likely to be offered by credit unions and local banks, so shop around and find a loan that works with your budget.

[Read: Best Starter Credit Cards for Building Credit.]

Get a co-signer. This is a way to build credit by using someone else's credit. You find someone, usually a parent or a relative, who has excellent credit. Then, you ask this person if they'd be willing to become a co-signer so you can get approved for a credit card.

Clearly, this can become a sticky situation. If your target co-signer is willing, then suggest a face-to-face discussion about the rules. Decide how much you'll spend on the card each month, what payment reminders you plan to set up and what happens if you default on the account. And keep in mind that not all of the major issuers allow co-signers, so do your research before the meeting.

Legally, your co-signer is also responsible for your debt. So, it's essential you hold up your end of this. Can you imagine what holiday dinners will be like if you don't pay the bill on time? That alone should be enough incentive to do a good job and focus on building credit.

Become an authorized user. If you prefer to avoid the possible complications that can occur with a co-signer, then ask someone with great credit if you can become an authorized user on one of their credit cards.

This person is typically a parent or relative who is willing to help you build credit. If you're an authorized user on someone's credit card, this means you are not liable for any debt that occurs. The account owner is legally responsible. So, be very responsible with the credit card. If you max out the card, this has a negative impact on the account owner's credit score.

The two of you should set dollar limits and agree on how the card can be used. And again, do a good job. You'll build credit and the account owner will be impressed by your sense of responsibility.

This strategy is unlikely to build credit fast, but your score should get a boost. After six months, integrate another strategy, such as a secured credit card, to get your credit score on an upward swing. Together, these strategies can help improve your credit in a hurry.

Look into getting credit for the rent you pay. I listed this option last because it isn't a strategy you should rely on exclusively to build credit fast. If you pay rent, then do check into this. But the value is unpredictable, so use this option in addition to one of the other credit-building suggestions listed above.

You may be able to get your rent to show up on your credit report, but that doesn't mean it will be considered when your credit score is calculated. There's still possible value, though. If a lender is reviewing your credit report, your excellent rental payment history will at least be seen.

It isn't possible to report your own rent payments to a credit bureau. So, ask your landlord if your payments are reported to a rent-reporting service, such as Experian RentBureau or PayYourRent.

There are several companies that report your rent payments to the bureaus. The cost varies, depending on if your landlord participates, so check what your monthly cost will be.

[Read: Best Credit Cards for Fair Credit.]

The Keys to an Exceptional Credit Score

To achieve a great credit score, you need to have a financial foundation in place and practice a few rules. Here's what you need to move up the credit score ladder:

-- Use a realistic budget and have a way to track your spending. If you don't set up limits, you'll overspend. But having a monthly dollar limit on dining out won't mean anything if you don't actually keep track of what you owe.

-- Pay your bills -- all of them -- on time. Payment history is 35% of your FICO score, so make it happen. Set up text reminders or automatic payments to stay on track.

-- Only use 10% of your credit limit. With a limit of $1,000, for instance, keep your balance less than $100. You've probably heard that 30% of your limit is OK. Well, it's OK if you want to wait longer to improve your score. To build your score fast, use the 10% rule. And that rule applies to each individual credit card as well as the overall total of your credit limits.

-- Don't open more than one credit card at a time. There's a myth that having lots of cards will boost your score fast. Resist the myth! Spread your applications out over several months. Each time you apply for a card, your score might drop around two to five points.

-- Start building an emergency fund. Life is unpredictable, and if you have a financial cushion, it gives a little protection to your cash flow as well as to your credit score.

-- Lastly, keep the faith. To build credit fast, set up your financial foundation and follow the rules above. It won't be long before you start seeing a healthy credit history and a rapidly improving credit score.

Updated on Oct. 17, 2019: This story was originally published on an earlier date and has been updated with new information.

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