How to Build Various Types of Credit

Good credit has an impact on your ability to get a loan for a new automobile or a new home. Credit may also be a factor in getting approved for insurance coverage or in passing a background check for a potential employer. Just as there are several reasons for needing good credit, there are several ways you can build your credit. 

The Purpose of Your Credit 

Credit is used to make financed purchases such as a car, house, property, or housing or employment decisions. For lending needs such as a mortgage or auto loan, it can take several years to build a strong enough credit history to secure approval. Credit cards or a line of credit with a small balance might not take an extensive credit summary for approval. You can build your credit through several strategies. 
 

• Become an authorized user on the credit account of a friend or family member 

• Establish a line of credit through a credit company or retailer 

• Take out a personal or credit-building loan 

• Consistently make all payments to financial commitments early or on time 

• Have your monthly rent reported to the major credit bureaus 

• Keep the available balances on revolving credit accounts low 

• Have a mix of secured and unsecured credit accounts on your report 

• Limit your credit applications and accounts to just what you need 

• Keep aged accounts open to establish a long credit history 

• Rely on resources like Ultra FICO, Experian Lift, and Experian Boost 
   

The Negative Impacts on Your Credit 

Good credit takes a while to build, and one missed payment to ruin. Your credit score is comprised of several factors, but on-time payments seriously impact your number. While there are many suggestions for building different credit types, there are just as many cautions to avoid certain behaviors that will drop your credit. Missed or late payments, credit cards that are maxed out or over the limit, too many credit applications, or short credit history will drop your score, no matter what types of accounts your report shows. 
 

The Quickest Ways To Credit 

Being added as an authorized user to another's credit line is one of the easiest and quickest ways to build credit, but this only works if the individual has strong credit. You don't want to open your history with the bad debt reports of another's. You can also use a secured credit card to establish credit and prove your financial responsibility. Credit-builder loans are designed for credit newbies in mind, though your payment habits influence how positively your credit is established. 
 

If you have financing goals or purchases that require good credit, these strategies can get your score moving in the right direction. Keep in mind that your finance habits will impact your overall credit health.