Learn how to do credit in use is not as complicated as you may seem, because you can start creating credit becoming an authorized user of a card. For entrepreneurs, it is important to make credit fast because it puts them on a favorable position in the eyes of lenders.
The step by step guide on how to build credit fast as an entrepreneur
Despite the first premise above, follow this step by step to easily solve how to build credit fast:
You know that if you don’t have a credit history, it is difficult to get a loan or a credit card, so how are you supposed to show a credit history if nobody gives it to you for the first time?
For you to obtain a FICO score, for example, you need at least one account that has been open for six months or more and at least one creditor that informs the credit bureaus of your activity.
Remember that you can obtain your credit score with different consultants which compete with FICO and is as efficient as the previous.
- Request a secured credit card, because if you build your credit score from scratch, you will probably have to start with a secured credit card. Since it is backed by a cash deposit, you make in advance, and that amount is usually the limit of your card.
- You will use the card as if you used any other credit card, you will buy whatever you want and make the payment before or on the due date, as they will charge you interest if you do not pay the balance in full.
- The cash deposit is used as collateral in case you don’t make the payments, and you will receive the deposit when you close the account.
- Anyway, and it is necessary that you understand that the secured credit cards are not intended to always be used since its purpose is that you qualify for a card without a deposit, that is to say, that it allows you to build enough credit so that you are eligible for a card No guarantee, with the best benefits.
- In this case, you should choose a secured credit card with a low annual rate and be sure to inform the credit offices of TransUnion, Experian, and Equifax.
Apply for a loan Credit Builder
A loan generating credit is intended to help people generate credit.
The money you borrow is withheld by the lender of an account, and the loan is not given to you until it has been canceled. In other words, it is a type of forced savings program with the payments that are reported to the credit bureaus since they are usually offered by community banks, credit unions, and some lenders that can offer it online.
How to build credit fast? Get a co-signer, since you can access an unsecured loan or credit card with a co-debtor. The dog understands that both you and the co-debtor will be subject to the total amount of the debt if you do not pay,
Become an authorized user on someone’s card. For example, a family member or friend may be willing to add you to your card as an authorized user. Then as an authorized user, you can access a credit card and create a credit history but not legally obliged to pay your charges.
It also finds out if the card issuer reports the activity of the authorized user to the credit bureaus.
Usually, it is reported, but you must make sure because otherwise all your efforts will be wasted if you do not create credit due to that misinformation.
In any case, you must reach an agreement on how you will use the card before they add you as an authorized user since it is possible that the main cardholder expects
you to pay his share, and you must make sure to pay despite not being legally bound.
Get credit for the rent you pay. Rental services such as Rent Track and Rental Kharma, take a bill you are paying and include it in your credit report, which helps you build a positive payment history.
Although not all credit scores have them, but like some, it may be enough for you to refinance parent plus loans, decide how to choose a credit card, or a credit card that establishes your credit history.