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The Fastest Way to Build Credit

By Philip Tirone

Question: What is the fastest way to build credit? I am applying for a business loan, and I need to bump my score up by about 60 points.

Answer: There are a lot of reasons you might want to raise your credit score, and raise it fast. In today’s environment, you might not qualify for a loan if your credit score is not at least 720. About 60 percent of employers run credit checks on potential employees. Landlords won’t rent to people with bad credit. You will pay more in interest if you have bad credit. The list goes on and on …

Fortunately, if you want to learn how to build credit fast, I have a great trick. This works best for married people, but single folks can use it as well. Let’s start by assuming you are married. Later, I will explain how to modify this example if you are single.

The Fastest Way to Build Credit: A Tip for Married People

To build your credit fast, transfer as much of your credit card debt into your spouse’s name. To do this, simply have your spouse “buy” your debt by paying your balance(s) with his or her credit card(s). Assuming you both have individual credit cards, this will cause your score to jump quickly.

You see, the credit-scoring bureaus place a lot of weight on something called a utilization rate. Each of your credit cards has a utilization rate, which is a number that describe how much of your limit you are utilizing. For instance, if a credit card has a $1000 limit and you have a $100 balance, you are utilizing 10 percent of your limit. Your utilization rate, therefore, is 10 percent.

Credit-scoring bureaus respond best if your utilization rate is below 30 percent, so if you want to learn how to fix credit, you should always lower your utilization rate.

Start by transferring balances to your spouse’s credit cards. Of course, this might lower your spouse’s credit score, but you will buy the debt back (thereby increasing your spouse’s score) once you have qualified for the loan.

In short, you will have better loan terms, and your spouse’s score will be lowered only temporarily.

The Fastest Way to Build Credit: A Tip for Single People

If you are single and also want to know the fastest way to build credit, you can modify this tip and use the same strategy with a family member or a loved one. However, be sure to put some structures in place so that your family member/loved one is protected. For instance, you might want to structure a proper contract by hiring a lawyer or using an online service such as Virgin Money. You might also give your family member/loved one collateral. Is your car paid off? Do you have an expensive piece of jewelry? One way or another, be sure that you never jeopardize family relationships just to raise your credit score!

And be sure to download our free ebooks about how to secure home and car loans during this tight lending environment.

  • DC

    “To build your credit fast, transfer as much of your credit card debt into your spouse’s name. To do this, simply have your spouse “buy” your debt by paying your balance(s) with his or her credit card(s). Assuming you both have individual credit cards, this will cause your score to jump quickly.”

    So just the spouse making a payment/s to the company/s you owe or have past due accounts with (my personal is 4 Dr bills from $77-$500) or do they have to be paid off? I’m still in the dark as to the difference between me making payments or paying it off myself.

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  • Thomas Stokes

    Philip, this is very good information. I like how you provide a method for the person willing to have you as a signatory on their account to be protected. It is good to see that information you provide sets the appropriate mindset for the person rebuilding their credit.

    Your method of instruction carries an underlying tone of responsibility. This is a key factor in setting up individuals for long term success. I like it.

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    What if you have NO! credit to start with? can this apply or do you have any tipes. Needing to build my credit ASAP.
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