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How Long Does it Take to Improve Your Credit?

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Have you ever wondered what a credit score is and why it matters? According to TransUnion, if you have a credit report, you have a credit score.

Your credit score is used as a way for other businesses and lenders to determine how you handle your money. The three credit reporting bureaus – TransUnion, Experian and Equifax – each monitor your credit report and use that information to create your credit score. Lenders and other businesses (such as a landlord) can use your credit score to decide whether to extend you credit.

Many people aren’t aware of where their credit score stands and are often surprised to realize it’s lower than they may have thought. This can be problematic if you need to apply for more credit or you’re having to use your credit score in another capacity, including applying to rent a home or enrolling in insurance. (Want to know your score? You can see your credit score for free using LendingTree.)

Several factors impact your credit score, and some of them you can control to improve your score over time. Here’s what you need to know to start improving your score.

How long it takes to improve your credit score

5 factors affecting your credit score

6 ways to build your credit

How long it takes to improve your credit score

Unfortunately, there’s no one perfect answer to this question. Building your credit can take a long time, but there are several fixes you can make sooner rather than later that will give you a boost in the short term.

If you’ve never used credit before, it takes three to six months for you to build a credit history that’s able to be evaluated and scored by the three credit reporting bureaus. But repairing your credit once it’s been hit by negative information takes significantly longer.

More often than not, your credit score is lower than you’d like it to be because you’re either:

  1. Using too much of your available credit
  2. Failing to make on-time payments (or have had a history of making late payments)

Negative information, such as late payments or collections, stay on your credit report for seven years. Bankruptcies or unpaid tax liens stay on your credit report for up to 10 years. Fixing the mistakes that are lowering your credit score, such as carrying a lot of debt or missing payments, can take a while to repair. But the sooner you start, the better. Keeping up these positive changes to your financial life can help you to build your credit over time.

Remember, even if it seems like progress is slow, consistency is key. Your credit report is constantly updated, with creditors reporting updates throughout the month, so even small steps in the right direction will start to have a positive impact on your credit score right away. But to see a dramatic improvement, you may need to keep pursuing these positive habits for a period.

5 factors affecting your credit score

Five primary factors impact your credit score. Each has a different level of importance when the three credit bureaus are evaluating your financial information.

Here’s a quick look at how your FICO Score is broken down:

1. Payment history

The No. 1 thing that the three credit bureaus will look at when evaluating your credit report and scoring your credit is your payment history. In fact, 35% of your credit score is based on your payment history.

If you’ve missed payments on bills consistently in the past or paid bills late, this will negatively impact your credit score. But if you pay bills on time and pay back your debt when it’s owed in a timely fashion, your payment history will have a positive impact on your credit score.

2. Total available credit

Thirty percent of your credit score is determined based on your total available credit (or your credit utilization ratio). Every person has a set amount of credit available to them. This might be the available credit line on your credit card, the amount of your mortgage or the various student loans you owe.

Your credit utilization ratio is the amount of credit you’re using based on what you have available. Many lenders like to see that you’re using 30% or less of your total available credit.

3. Length of credit history

The length of your credit history determines 15% of your credit score. Lenders often like to see a somewhat longer credit history to help them better predict what your future behavior might be.

A long, positive credit history indicates that you’ll be on time with payments, while a short, relatively negative credit history may indicate that you’re not reliable when it comes to making on-time payments or responsibly utilizing your credit. Generally, the longer (blemish-free) credit history that you have, the better.

4. Types of credit being used

When it comes to budgeting, we often hear the terms good debt and bad debt. Although it’s tough to assign a value to any debt, credit reporting companies take into account what types of credit you’re using in an attempt to predict future behavior.

For example, if you have multiple credit cards and are applying for another, they may not score you as favorably as someone who has one credit card and a mortgage. This accounts for 10% of your credit score.

5. New credit

You’ve likely heard the term hard inquiry when lenders pull your credit score. Too many hard inquiries indicate that you’re signing up for multiple types of new credit, whether that’s a credit card, a loan, a mortgage or just applying to rent an apartment. This could negatively impact your credit score. The amount of new credit you hold makes up 10% of your credit score.

6 ways to build your credit

If you’re ready to jump in and start rebuilding your credit, there are a few things you can start doing right away.

1. Pay down your debt

This task may be easier said than done, but it’s one of the best ways to improve your credit score. By paying down existing debt, you’re reducing the total amount of credit you use. This can be a huge benefit when trying to improve your credit score.

2. Resolve incorrect information

Occasionally, there is incorrect information on your credit report. For example, a payment may be listed as late when it wasn’t, or some of your debts may not be registered as paid yet. The best thing you can do to review your credit report is request it for free from one of the three credit reporting bureaus, take notes if you see anything suspicious and dispute these findings. If you don’t hear back, follow up. It’s important that your report is a correct reflection of your financial history to maintain a good credit score.

3. Pay bills on time

Paying your bills on time is another way to rebuild your credit slowly. If you have a long history of late or missed payments, it may take time for your new, positive repayment habits to be reflected in your credit score. But like most things in the financial world, consistency is key. If you continue paying your bills on time (and every time), your past negative payment information will eventually fall off your credit report, and only the new information will remain.

4. Don’t close your longest standing line of credit

If you only have two lines of credit – a brand-new credit card and a credit card you’ve had for 10 years — it can be tempting to close your old card. This is especially true if you feel it’s not getting any use or you don’t love the rewards and benefits it provides. Resist the temptation to close the card. You want to show longevity in your credit history.

5. Keep accounts open and maintain a zero balance

Although you don’t want to close your long-standing lines of credit, that doesn’t mean you have to use them. Experian recommends keeping your accounts open and maintaining a zero balance. This helps to increase the length of your credit history, showing that you’re using less credit than you have available (decreasing your credit utilization ratio).

6. Limit hard credit inquiries

If you’re worried about your credit score, limit the total number of hard credit inquiries as much as you can. This might mean applying for fewer lines of credit or only applying for credit when you need it. One thing to note is that if you know you need to get multiple hard inquiries done in a short period, try to bunch them together in a space of days. This will allow them to be counted as just one hard inquiry on your report.

It may be tempting to apply for more credit and not use it to reverse engineer a low credit utilization ratio, but the credit inquiries and a sudden uptick in the amount of credit you’re applying for may read as risky to lenders and credit reporting bureaus and hurt your credit score.

Stay the course

Repairing your credit can be a long road, but it’s well worth it. Besides repairing your credit, these positive changes to your lifestyle and personal finances will have a lasting impact. Paying down your debt, limiting the amount of credit you take on and making on-time payments will enforce good financial habits for the rest of your life — and that’s something to be excited about. So if you’re feeling frustrated or overwhelmed by repairing your credit, remember: Stay the course. All the hard work you’re putting into this process will pay off with time.


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