Zero to 750: What’s the fastest route to a high credit score?
Credit newbies should focus on responsible use, not speed
By Brady Porche | Published: March 17, 2017
Focusing on credit scores and what consumers can do to improve them
Attaining excellent credit with scant borrowing history requires patience, but a few methods can kick your credit score into high gear.
Those with little or no credit history have limited options when shopping for credit cards, but there are a few simple ways to get started. You can apply for a secured credit card, which requires a cash deposit as collateral. Or, you can ask a family member or friend who has a credit card account to add you as an authorized user. Another way is to have someone with good credit co-sign with you for a new card, though few issuers offer this option anymore.
You’ll have to wait a little while after opening any new account to get a credit score if you have no prior credit history. FICO’s minimum scoring requirements include at least one account that has been open for six months and that has been reported to a credit bureau within that time. When you open a new credit card account, it typically gets reported to the credit bureaus within 30-45 days.
What’s the rush?
There are several good reasons why a consumer might want to build a sterling credit rating as quickly as possible. Maybe you’ve just graduated from college in a bike-friendly town, but you’ve landed a new job in a city where owning a car is a must. Perhaps you’ve just gotten married and live in a small apartment that won’t comfortably accommodate you, your spouse and all your collective belongings. If you’re itching to buy a car or a house and have little or no borrowing history, you’ll need to conjure up a good record of credit to get the best loan terms possible.
Once you get rolling, the speed at which you achieve a credit score of 750 or higher depends on many factors. And it’s not possible to predict how long that will take under any scenario.
“There is no set time frame,” said Heather Battison, vice president at TransUnion. “I can’t stress enough that building credit takes time and varies by consumer based on their individual credit history and behaviors.”
Team up, or go it
In theory, being an authorized user on someone else’s account should help you build credit faster than secured or co-signed cards. However, it depends entirely on the history of that account, which you’ll inherit as an authorized user.
If the primary cardholder has any black marks, such as a missed payment, a judgement or a collection, those could appear on your credit report. Additionally, if the card balance is more than 30 percent of the credit limit or it’s a relatively new account, that could keep you from achieving a high score. Payment history and credit utilization combine for 65 percent of FICO’s traditional scoring method. Length of credit history accounts for another 15 percent of your FICO score.
If the primary user has a long history of on-time payments and low credit utilization, that could jump-start the credit of an authorized user. On-time payments made by the authorized user could also help, but it’s not a guarantee.
“Credit card companies don’t always report authorized users’ on-time payments to the credit bureaus, so consumers will need to verify that with their card issuer,” TransUnion’s Battison said.
Credit card companies don't always report authorized users' on-time payments to the credit bureaus, so consumers will need to verify that with their card issuer.
Barry Paperno, a credit scoring expert who has worked for FICO and Experian, added that newer versions of FICO’s credit scoring model – including the widely used FICO 8 – were designed to combat excessive piggybacking.
“The older models don’t differentiate between how the card is held – primary, joint or authorized user – when it comes to the number of score points delivered,” he said. “FICO 8 and 9 have authorized-user trade lines generating fewer points than the older ones for some consumers with very short credit histories.”
Co-signing a credit card can also leave you exposed to another person’s bad credit habits – and it’s even riskier than being an authorized user. Both users are responsible for the debt – so you could be on the hook if your co-signer rings up a high balance and can’t pay it back.
Before becoming an authorized user or a co-signer, don’t be afraid to ask your “buddy” about his credit habits and history. And if you’re an authorized user, find out what access you have as far as checking the account balance and making payments, as this can vary by issuer or by product. Whether you’re a co-signer or an authorized user, it’s important to keep an open dialogue with the other person about the status of the account.
A secured card may be the least risky credit-building option. With a secured card, the credit limit doesn’t typically go any higher than your cash deposit, and you are solely responsible for managing the account. Keep in mind that any missteps such as late payments will prolong your timetable for getting a high credit score.
“With a secured card, consumers can use credit for small purchases like groceries, pay the balance in full each month and establish a history of responsible borrowing,” Battison said.
Of course, with a secured or co-signed card, you’re starting from scratch instead of inheriting someone else’s established credit history.
“This is where a seasoned – better yet, vintage – authorized user card can have an advantage over a secured card,” Paperno said.
Speed is not the
While there are good reasons to want to hurry up and build credit, it’s better to focus on how you manage it than how quickly you can achieve a certain credit score. To get the best score in the least amount of time, focus on paying your bills on time each month and keep your balances as low as possible. If you partner with another cardholder, make sure that person follows the same regimen.
“There’s no quick fix, so speed shouldn’t be a consideration,” Battison said.
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