Here’s the script for the “How To Build Credit Quickly At 18 Or Older” video above:
Now you won’t even have a credit file that you can access when you’re under 18. If that no longer applies to you, though, then you’ll want to learn some other strategies on how to build credit quickly at 18 or older.
You’re going to learn some strategies here that you can apply immediately and watch your score grow in the next 30 days. Firstly, you’ll need to know where you’re at before applying for anything for one reason. If you have active collection accounts, nothing you learn here will work because banks won’t lend you anything if you’re already actively late on something.
So let’s start by opening a Credit Karma account. They’re totally free and will refresh your reports and scores with two of the three bureaus every week, and it won’t hurt your credit for you to pull your own report. Check to make sure you’re not actively reported as being late on something, and you have no collections. If you do, you’ve got to take care of that first. If you don’t, then awesome. Let’s get to work.
First thing will be if you have any credit cards right now that have been open for more than six months, call them or go online and ask for a limit increase. This is the lowest-lying fruit for you. 30% of your score is based on credit utilization. The more you use of your balance, the lower your score. So we want to increase limits on existing cards to lower the utilization rate.
Let’s say for an example that you have a card with a $500 limit, and you owe $250 on it. That’s a 50% utilization rate, and it will lower your score. Now, what if all you do is call them and ask for them to double your limit to $1,000. Just from a phone call now, you only have a 25% utilization rate, and your score will go up, and you didn’t pay them anything! You will want to set a reminder to call your cards every six months and do this.
The more credit you have available, the higher your score will be.
While we’re on the subject of calling cards or applying for new ones, they will ask about your income. What most people don’t realize is that it isn’t just YOUR income if you live with other people or someone else contributes to your bills. I called a major bank a couple of weeks ago to increase the limit on my card, and the rep literally said, “What’s your annual income, including everyone who contributes to your bills.” Look at the fine print on any card application. They specifically say that you may include other people’s income that’s regularly used to cover expenses. So if you’re married, add your spouse’s income. If you live with your parents, add their income to yours! Don’t lie obviously, but if you’re working a part-time job and live with your parents, you can legally include their income with yours since they’re likely paying for all of the housing expenses anyway.
If you don’t have any cards or only a couple, having some more will help to build credit quickly at 18 or older. Just don’t apply for more than 3 in a day, and when you do that, don’t do it again for at least a few months. Hard inquiries have a minimal impact on your score, and they’re offset considerably with the boost to your score by having more credit available. Still, you don’t want to apply for a card that you have no chance of getting.
There are a couple of ways to improve your chances. First, if you’re on Credit Karma, they’ll show you offers with your approval odds highlighted on a scale. Credit Karma is free for you because they make their money by referring members to bank products. The second way is to check if you’re pre-qualified for offers directly with the bank, and I’ll go ahead and include some links below to help. The bank will do a soft inquiry, so it won’t affect your credit. They’ll let you know if you are pre-qualified for anything. If you are and go through with the application, then there will be a hard inquiry on your report…but if they say you’re already qualified, then they’re going to say yes.
So work through these tips to build credit quickly at 18 or older. Call your cards if you have any, apply for a couple of new ones, and, most importantly, manage everything responsibly. Improving your scores will put you on a path for the best interest rates and approvals on cars for the rest of your life.
Credit Karma: https://creditkarma.com
+ Capital One: https://www.capitalone.com/credit-cards/prequalify/
+ Discover: https://www.discovercard.com/application/prequal
American Express: https://www.americanexpress.com/us/credit-cards/check-for-offers/
* Car Buyer Class, LLC is not specifically endorsing any of these products and makes NO money if you click on any of these direct links.
+ Great for first-time credit.
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