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How to Build Your Credit Score in 2019

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Credit Sesame

Everyone talks about “building your credit score”, but how do you actually do that? In this article we’ll look at why building your credit is important, as well as some of the best strategies to help you build your credit score quickly.

Building Your Credit Score Quickly

Your credit score tends to be one of those things that is “out of sight, out of mind” — but it should be anything but. There are not many things that will have a bigger impact on your financial life that your credit score will. Having good credit not only makes it easier for you to buy the things you want, but it can also save you a significant amount of money. What’s more, did you know having poor credit can actually keep you from getting a new apartment or even in some states, a new job?

But a credit score isn’t something that you’re automatically given. For instance, to have a FICO Score, you need at least one account that’s been open for six months or longer, and you also need at least one creditor reporting your activity to the credit bureaus within the past six months. It’s sort of like the chicken and the egg — you need credit to qualify for the best credit cards, but it’s hard to get a credit card without established credit. Which comes first?

How to establish credit and why it’s important

There are a number of reasons why it is so important to establish credit. For instance, the interest rate you will pay when purchasing a car, your ability to lease an apartment, whether or not you get that new job, if you have to pay a security deposit when setting up utilities — these are all things that can be directly impacted by your credit score.

One of the biggest benefits of establishing good credit is the amount of money that it can save you over the long run. Take a look at the numbers below — this shows the amount you can save by having good credit versus having no established credit. For instance, over the lifespan of a 20-year mortgage, you could save more than $50,000 by having good credit. Similarly, over 10-years you could save more than $15,000 on student loans with good credit versus no credit.

How a credit score affects saving money

Common AccountsNo Credit CostAPRGood Credit CostAPRSavings
1 Year – Utility Deposits$600Up to 20%$00%$600
5 Years – Car Payment$28,82911.64%$24,0463.97%$4,783
10 Years – Student Loans$60,13310.25%$44,5923.53%$15,541
20 Years - Mortgage$434,1606.245%$381,1205.52%$53,040
Source: Reviewed average interest rates on common payment types.

Now that you can see the financial implications of why it’s important to establish credit, let’s take a closer look at some of the best ways to build your credit.

How is your credit score calculated?

When it comes to how your credit score is calculated, there are several factors that contribute to your score. For the purpose of this article, we’re going to look at the scoring model for your FICO Score, since it is the most widely used and known model. As you can see below, there are a number of factors that combine to make your score, including:

  • Payment history
  • Credit utilization
  • Credit age
  • Different types of credit
  • Number of inquiries

Each of these factors are weighted differently when calculating your score —meaning, some are more important than others. For example, you can see below that your payment history makes up roughly 35% of your score while the number of inquiries you have only contributes 10% to your score.

FICO Scoring Model Calculation (Weight) Factors

Credit FactorsCredit Score Weight
Payment History35%
Credit Utilization30%
Credit Age15%
Different Types of Credit10%
Number of Inquiries10%
Source: Data found September 26, 2018. Boeing Employees Credit Union website. Understanding Your FICO Score. Retrieved from https://www.becu.org/articles/understanding-your-fico-score

Once you understand how your score is made up, you can make better-informed decisions on how to build it. We spoke with Credit Sesame member, Cindy, about her road to building her credit. Here’s what she had to say:

Cindy’s journey to build her credit score

Member Since: 12/29/2017

We interviewed Cindy on August 2, 2018; she is a 21-year-old college student who graduated from college in early June. She is single, no kids, and about to move out of her Sororities house in East Lansing, Michigan. Her goal is to start working near her college in her field of study, journalism.
Why did you decide to start building your credit?
I had planned to move out with some friends right after the beginning of the year, but when we applied, I was turned down because I did not have a credit score. It came as a complete shock to me. I mean I have a credit card for emergencies. I thought for sure I would have a credit score, but I guess you actually have to use the card to get a credit score.
What were your priorities to establishing your credit score?
I have until the end of August to move out of the house and so I need to make sure I have a good enough credit score in order to rent an apartment in town. I also have been looking for a job, and in this state, employers can look at your credit score.
How long did it take you to do this?
After I was denied the apartment I began looking into what a credit score was, and what I needed to do to make one. The first thing I started to do was buy things using the credit card, so that helped. Then I used the money that I made doing work study to buy a small car on payments. It is now the beginning of August and my score is good enough to not only get the job I wanted, but to also rent this cute apartment near work. So, it took me about eight months to go from no credit to good credit, but I am still working on it.

If you’ve ever been in a situation like Cindy, you know that it can be discouraging when you’re denied something because of credit. Her story is a great reminder that building credit can take time, but that it’s certainly achievable.

Let’s look at some of the benefits of learning how to build your credit as well as some of the most important strategies.

Benefits of learning how to build credit

As we discussed, learning how to build your credit score is important for a number of reasons —primarily because credit drives many of the big purchases you’ll make in your life. It even impacts smaller (but still important) purchases like the deposit you’ll pay when signing up for utilities or a new cell phone carrier.

Is one method of building your credit better or faster than the others?

One of the questions we hear most often is “What can I do to build my credit as quickly as possible?” We asked Credit Sesame members what strategy they initially used to build their credit, and then we compared that with their average credit score.

Average Credit Score for Beginners

Type of CreditPercent of members building with creditAverage credit score
Credit Cards with no Co-borrower37.6%635
Authorized User Accounts19.1%661
Student Loans15.5%649
Co-Borrow Accounts14.9%679
Other – Collections, Cell Phone, etc.
12.9%629
Source: Surveyed 1000 members between September 2015 and September 2016 on what they initially used to build credit.

As you can see above, the members who got a co-signer for a loan have the highest average credit score at 679, making this a great option to start building your credit. Becoming an authorized user on a family member or friends credit card can help your credit score jump as well. If you are a student, consider taking out even a small student loan to diversify your credit.

The strategies you see above are some of the most common in building your credit score. Let’s take a look at each of these, why they’re important, and how to execute them effectively.

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How to build your credit fast

Below are some of the common strategies for building your credit score. You’ll see that some take more time than others, but each are directly related to the ways in which your credit score is calculated.

Apply for a secured credit card

Consider applying for a secured credit card. Once approved and being a secured card Cardmember, and managing your account responsibly, you can use the card as a tool to build your credit from the ground up. For one, it is generally easy to get approved for a secured credit card, because you have to put down a refundable deposit (this typically becomes your credit limit, but not always, it depends on the card issuer). If you don’t make your payment as agreed, the financial institution can simply take the funds out of your deposit. Even though the money is technically covered by your deposit, you still need to make all the payments due – it’s important to make sure that you make your payments on time, every time — your payment history will be reported to the credit bureaus, however be sure to read the fine print of the offer you are considering as not all secured cards report your payment activity to the three major credit bureaus.

As you can see from the data below, someone with poor credit can see an increase from 425 to 475 in roughly 18-months. The impact of a secured credit card was even greater for individuals with fair credit —moving from an 581 to a 640 in the same time frame.

Building credit with a secure credit card

Credit Score over time3-6 Months6-12 Months12-18 Months18+ Months
Poor425446462475
Fair581614625640
GoodN/A672719738
ExcellentN/AN/A743760
Source: Review of 250 individuals who used specific methods to build credit.

Apply for a credit builder loan

A credit builder loan is another great way to begin to establish a good credit history. As with secured credit cards, credit builder loans do not require that you have good credit to be approved. What they do require, however, is that you can prove you have enough income to make the payments.

The amount you borrow is held in a bank account, while you make regular payments. Your on-time payments are then reported to the three major credit bureaus, building and boosting your credit score. And since your payment history is the single biggest factor in your credit score, those on-time payments can really have a big impact. Once you have made enough payments to pay off the loan, the bank releases the full amount of the loan to you.

We looked at individuals who used a credit building loan to build their credit score and, as you can see below, people with poor credit were able to increase their score from 413 to 554 in roughly 18-months.

Building credit with a credit building loan

Credit Score over time3-6 Months6-12 Months12-18 Months18+ Months
Poor413440510554
FairN/AN/A580614
GoodN/AN/A682712
ExcellentN/AN/A740783
Source: Review of 250 individuals who used specific methods to build credit.

Get a co-signer

If you’re having trouble getting approved for a loan or a credit card, another tactic you can use to get approved and build your credit is to get a co-signer. Whether it’s a parent or a friend, getting a co-signer who already has established credit can lend you instant credibility when it comes to your own credit.

The reason that having a co-signer helps is that the bank knows if you are unable to make the payments, the individual who signed for you likely will, therefore the bank is not worried about losing their money. You and the co-signer however, are worried about your credit. Not all lenders or credit card issuers allow co-signers, so be sure to check if this is something you are considering. In addition, if you are planning on co-signing on a loan or credit card  be sure you understand what you are agreeing to and the potential risks involved.

When we surveyed individuals who got a co-signed to build their credit score, those with poor credit were able to move their score from a 370 to over 570 in just 18-months.

Building credit with a co-signed loan

Credit Score over time3-6 Months6-12 Months12-18 Months18+ Months
Poor370421482576
FairN/A584631674
GoodN/AN/A678736
ExcellentN/AN/AN/A775
Source: Review of 250 individuals who used specific methods to build credit.

Become an authorized user on an established account

Another tactic if you are having trouble getting approved for a loan or a credit card of your own, due to lack of credit, is to become an authorized user on someone else’s credit card. This person is usually a parent, who is able to add a user directly onto their account.

As an authorized user, you are authorized to use the account to make purchases, but the account owner is ultimately responsible for the payments and the bills that come in each month — so another responsibility to take seriously. The credit card will be reported to your personal credit report, thus helping you build your credit profile.

As you can see below, this strategy helps people improve their score in all score ranges. Even someone with good credit was able to improve their score from a 674 to 732 in roughly 18-months.

Building credit as an authorized user

Credit Score over time3-6 Months6-12 Months12-18 Months18+ Months
Poor530548561579
Fair583607632662
Good674702718732
Excellent740756772787
Source: Review of 250 individuals who used specific methods to build credit.

These are just a few of the strategies that you can use to help improve your credit score and build your credit history. While few will offer an instant-fix, with time and a bit of work, you can certainly build your credit score.

TLDR; building your credit score

Having established credit is crucial to your everyday life. It makes it easier for you to be able to buy the things you want and it can save you money in the process — but it’s much more far-reaching than that. Your credit score can determine whether or not you qualify to buy a new home, or even if you’re able to get a new job. Regardless of which strategy or strategies you choose to try, rest assured that each of these tactics, along with a responsible use of credit, will definitely help you build your credit over time.

You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved.
Published January 22, 2019 Updated: April 30, 2019
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Angela•  October 13, 2016 Edit
I appreciate all of your very useful information about rebuilding credit, and the %'s of how the credit score is established. Every one needs to know their score and be able to review their full report in order to be able to repair and remove bad or false statements. Sincerely, Angela
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