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How Long Does It Take to Build Credit from Scratch?
How long it takes to build credit depends on a few things, including whether you’re starting from scratch or rebuilding after a setback.
If you’re starting from scratch, it generally takes six to 12 months of responsible credit use to build up a good credit history. This means making your payments on time, keeping your balances low, and only applying for new credit when you need it.
If you’re trying to rebuild your credit after a set back, such as a missed payment or maxed-out credit card, it will likely take longer than six to 12 months. How much longer depends on the severity of the setback and your overall credit history.
In either case, the best way to build credit is by using credit responsibly over time.
How Long Does It Take to Rebuild Credit?
Are you trying to rebuild your credit score? If so, you’re not alone. Millions of Americans have been through financial difficulty, and many have found themselves with bad credit as a result. The good news is that it is possible to rebuild your credit score, but it takes time and effort. Here’s what you need to know about how long it takes to rebuild credit.
The first step is to get a copy of your credit report from all three major credit reporting agencies: Equifax, Experian, and TransUnion. You’re entitled to one free copy of your report from each agency every year. Review your report carefully to make sure there are no errors or inaccuracies. If you find any, dispute them with the credit bureau right away.
Next, start making all of your payments on time, every time. This includes any bills, loans, or other debts you may have. This is the single most important factor in rebuilding your credit score. Payment history accounts for 35% of your FICO score, so missing even one payment can damage your score significantly. Try setting up automatic payments for all of your bills to make sure you never miss a payment again.
In addition to paying on time, you should also work on paying down your debt. The amount of debt you owe makes up 30% of your FICO score, so carrying a high balance can drag down your score even if you’re making all of your payments on time. Begin by paying down any debts with the highest interest rates first and continue working your way down until all of your debt is paid off.
Finally, keep an eye on new applications for credit. Every time you apply for a new line of credit (such as a credit card or loan), it results in a hard inquiry on your report which can hurt your score. Only apply for new lines of credit when absolutely necessary and be sure to shop around for the best rates before applying to minimize the impact on your score.
Rebuilding your credit takes time and effort, but it is possible to do it yourself if you’re patient and willing to work at it. For more information on rebuilding your credit, check out our other articles on the subject matter.
The Bottom Line: How Long Does It Really Take to Build Credit?
Only time can build a strong credit history. The two major factors in your credit score—payment history and credit utilization—take time to develop. Payment history is the record you’ve established by making on-time payments, and credit utilization is the amount of available credit you’re using.
Typically, it takes about six months of timely payments to establish a good payment history. As far as credit utilization goes, using only 30% of your available credit lines (on all your accounts combined) is optimal, but it can take months or years to get there depending on how much debt you’re currently carrying.
Building a good credit score takes time, but there are things you can do to speed up the process:
-Make sure you have at least one open and active account: You need an account committed to your name in order to start building a credit history. If you don’t have any accounts in your name, consider opening a secured credit card or becoming an authorized user on someone else’s account.
-Pay all your bills on time: Payment history is the most important factor in your credit score, so it’s important to make all your payments on time, every time. Set up automatic payments if you can so you never miss a payment due date.
-Keep balances low on revolving accounts: Credit utilization (the amount of debt you’re carrying compared to your credit limits) is also an important factor in your credit score. Try to keep balances below 30% of your total available credit lines across all your accounts combined.