In order to build a credit score, you will need to create a relationship with a lender. The easiest and the fastest way to do this is to open a credit card account. This account will provide a way for you to demonstrate your reliability and trustworthiness through documented records. These records will make up your credit score.
Before you begin applying for credit cards, it is important to learn the basics of maintaining good credit. To build credit in under a year, you will need to stick to a few hard and fast rules. Any slip-ups during this time could be heavily damaging to your credit score.
Rule #1: Only make purchases you can afford to pay off immediately.
Rule #2: Pay your bill in full.
Rule #3: Pay your bill on time.
Your credit score is an evaluation of your reliability for lenders. How successful you are at establishing a pattern of stability through your payment history will be the determining factor in achieving a good credit score.
Students enrolled in post-secondary education should consider applying for a credit card through their school. Colleges will often partner with major credit card companies to offer their students low interest, low limit credit cards. Similarly, major banking institutions will also partner with credit companies to offer their clients credit cards that are unique to that partnership. Among them will be a few cards that offer limits of $500. Getting approval for these cards will typically require proof of regular employment in the form of pay stubs. Banks may also require that your source of income comes from a salaried position as opposed to contract work.
In the case that school credit cards and bank credit cards are not an option, your final option for building fast credit will be to apply for a secured credit card. There are two types of credit card: unsecured and secured. Unsecured cards are your average credit card that most people are able obtain once they have an established credit score. Typically, these credit cards will have higher limits and only require a good credit history for approval. When starting from zero, the latter, "secured" cards are the best option for building up a credit score in very little time.
Secured credit cards require no previous credit history for approval. Instead, they require a security deposit of a few hundred dollars when the account is opened. This deposit protects the credit card company if the cardholder is unable to pay the balance. The limit on the card will be either the total sum of the security deposit or, at the very least, a large percentage of it. Some secured cards also carry a small annual fee.
Once you have opened a credit card account, your next task will be to start building a credit history. Make small purchases with your card and remember to pay off those purchases in full as quickly as you can. Above all, pay on time to avoid to consequences of late payments.