First off you have to create a favicon file using a internet source and name it favicon.ico. I used http://tools.dynamicdrive.com/favicon/ and just uploaded my image. But you can also use http://www.favicon.cc/.
Then go to your Bluehost home page and click on the cPanel button:
Under cPanel find the File section and click on File Manager:
The file manager will open in a new tab. On the left side of the screen make sure you have the public_html folder open:
Then upload your favicon.ico file using the below button:
Before uploading your favicon make sure to check the overwrite files box. To upload your file click the choose file button and find your file. It uploads automatically:
After you have overwritten the old favicon.ico in Bluehost the favicon for your website. If it has not changed yet, go to your URL/favicon.ico then hit refresh.