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How Long Does It Take for Your Credit Score to Go Up?
By Talon Abernathy MONEY RESEARCH COLLECTIVE
Your personal credit score determines how much money you can borrow and at what interest rate. Excellent credit scores can save you thousands of dollars or more on interest payments. But a poor credit score may make it impossible for you to buy a house, rent an apartment, or even get a job.
If you’ve taken steps to fix your poor credit score, you’ve probably noticed a lag between your corrective actions and improvements in your score. How long does it take for your credit score to go up? Generally speaking, lenders report to the three major credit bureaus every 30 to 45 days. Curious about what steps you can take to rectify your bad credit? The following guide provides an in-depth look at credit scores, how they’re calculated, how quickly they change, and what you can do to improve yours.
A realistic timeline for improving your credit score
Your credit score ranges from 350 to 850. Depending on the credit reporting agency, “poor” credit scores range from 350 to 579 while “excellent” scores go from 781 to 850.
The good news is that bringing your score up from “poor” to “fair” or “good” can be done relatively easily. But if your credit is already in the “good” category (661 to 780), pushing it up to excellent may take longer.
Your personal circumstances will impact this even further. For example, coming back from a missed bill payment is easier than repairing your credit score after bankruptcy. If you’re paying down excessive credit card debts, you’ll need a longer timeline to achieve excellent credit than someone with no current debts.
In this section, we’ll focus mostly on best-case scenarios. These are ways to bring your credit score up to an excellent level assuming everything goes right. Of course, things don’t always go according to plan, so think of these timelines as rough guides, not hard and fast rules.
No credit to excellent credit
It’s possible to build an excellent credit score from scratch in just six months. Remember that you won’t get to a perfect 850, though. Very few consumers ever attain a perfect credit score and those who do take years to get there. However, you can reasonably expect to raise your score significantly if you follow these tips:
- Get added as an authorized user on your parent’s credit card. As long as the cardholder has excellent credit, your credit score will benefit from their good choices. And actually, the primary cardholder doesn’t even have to be one of your parents; it can be anyone who trusts you enough to hitch their credit history to your spending and repayment habits.
- Make all of your payments on time. On-time payments are the number one contributor to a solid credit score. More on that in the next section.
- Sign up for more than kind of credit. Having multiple types of credit, such as credit cards, car loans, mortgages and student loans, will do more for your credit score than a single type of credit.
- Get a secured credit card if you’re unable to qualify for a normal one. If you don’t have any credit history, you might find it tough to qualify for a credit card. You can get around this requirement by applying for a secured credit card. With a secured credit card, you put up a cash deposit as collateral to borrow against. On-time payments are reported to the major credit bureaus, helping you build your credit history.
Bad credit to excellent credit
If you have a bad credit score, it’s not the end of the world. In fact, it’s easier to get from a bad to a fair credit score than a good to an excellent score. You can see some improvement in one to two years, although the exact length will depend on why it’s so bad in the first place and how effectively you can expect to tackle it. In a worst-case scenario such as bankruptcy, your credit score may not fully recover for a full decade.
First, you should look at why your credit score is so bad. If you have a single late mortgage payment, your credit score might take somewhere between nine months and three years to recover. If you have a history of repeated late payments, it will likely take longer.
Fair credit to excellent credit
You’re in decent shape if you already have a fair credit score, defined as a VantageScore between 601 and 660. However, you’ll need to pump those numbers up to qualify for the best rates. Fortunately, you can get your fair credit score moving upward in several months at the earliest. Getting your credit above 781, defined as excellent on the VantageScore scale, will likely take you at least a few years of continual on-time payments. You’ll also want to adhere to the tips outlined in the next section.
What impacts your credit score?
What hurts your credit score? Outstanding debt, hard credit inquiries and inconsistent payment history can all lead to a poor credit score. On the flip side, making on-time payments, keeping your credit utilization rate down and maintaining a solid mix of credit types can contribute to a positive credit score. Continue reading as we take an in-depth look at each credit score factor.
On-time payments
Credit bureaus use a formula that weighs different variables to determine your credit score. At 35%, payment history makes up the largest chunk of that formula. Making consistent, on-time payments will help keep your credit score healthy. Conversely, missing or making late payments is one of the worst things you can do for your credit score. Consider setting up automatic payments for all of your recurring bills to protect your payment record.
If you miss multiple payments, you run the risk that the outstanding debt will be sold to a collections agency. Known as a charge-off, this bad debt gets reported to the three major credit agencies, and your credit score will drop.
Does paying off collections improve credit scores? The answer is a qualified maybe. Older debt collection models will keep records of a charge-off for seven years regardless of payment status. If you do pay off the debt, the charge-off note will remain, but a note will be added to it. Additionally, your credit score may experience a modest bump. Recent credit score innovations from VantageScore and FICO do not keep records of paid charge-offs. However, not all lenders have switched to these newer credit score models yet.
Credit utilization ratio
Your utilization rate refers to the amount of money you’ve borrowed across your revolving credit lines, expressed as a percentage of your credit limit. For example, if you have a credit card with a $10,000 credit limit and you’ve currently borrowed $3,000 then your credit utilization rate is 30%. Credit bureaus look for a credit utilization ratio of 30% or less. In their eyes, lower utilization rates indicate better financial health.
Pay off any excess credit card balances you currently have to lower your credit utilization. You can also request an increase in your credit limit on your existing cards. Don’t open another credit card, though. That may be counterproductive since most credit card companies do a hard credit pull on new accounts, causing a drop in your score.
Lines of credit
The major credit bureaus look at what lines of credit you have. Generally speaking, the greater variety, the better. Credit bureaus view someone who consistently makes payments on a mortgage, car loan and credit card as a better bet than someone who only makes payments on their credit card. The assumption is that experience with multiple types of credit shows an ability to manage different payment obligations.
However, having too many lines of credit can hurt your credit score. If you’re juggling multiple car loans, student loans, a personal line of credit, a mortgage and five different credit cards, lenders might not be keen on opening another line of credit. There’s no simple answer when it comes to how many lines of credit you should hold at one time. Generally, two to three credit cards and several other manageable debts will be fine for most people.
Credit history and length
If you’re a parent, consider getting your child a credit card before they go off to college. Credit score formulas give heavy weight to your credit history. When building your credit history, the longer it goes back, the better. The length of your credit history will make up 15% of your total credit score under most credit score models.
Tips for building credit
Are you looking for a few tips on how to increase your credit score quickly? Consider using one or more of the following suggestions to start working on your credit score.
1. Make more than the minimum payments
Our first tip for how to get a good credit score is to increase the amount of your monthly payments. Making only the minimum payment on your credit card bill may seem tempting. But in the long run, it’ll cost you more than the interest fees you’ll have to pay on the remaining balance. When you only make the minimum payment on a bill, you’re negatively impacting your credit utilization rate by holding on to an outsized amount of debt.
2. Don’t open new accounts
One of the best ways to improve your credit score in the short run is not to open up any new credit accounts. When you apply for a loan, the lender typically makes a hard credit pull. Hard credit pulls have a short-term, negative impact on your credit score. It will take two years for the hard pull to fall off your credit report, although the blow to your credit score will only last for a few months to a year.
If you have to open a new line of credit, consider getting all your hard credit inquiries done in two weeks. Major credit bureaus count all hard credit pulls done within a two-week window as a single inquiry. If you’re shopping for a mortgage or refinancing your house, this can save your credit score from going down the drain.
3. Don’t add to existing debt
If your credit is already bad, don’t take on more loans. It may seem like a simple piece of advice, but so many people suffering from high debt levels fall into the trap of thinking what’s one more loan? Remember, driving up your credit utilization rate and increasing your lines of credit negatively impact your credit score. More debt equals limited lending options in the future. Also, it isn’t nice for your budget.
Work toward a healthy financial future
It’s never too early to start working toward a positive credit score. Even if major home and auto purchases are years away, you’ll still benefit from engaging in responsible credit building today. To up your credit score, maintain a diverse credit mix. Two to three credit cards and one to three other loans — like a mortgage, auto loan, student loan or personal line of credit — should suffice.
Don’t take out too many credit cards, however. Be mindful of opening new accounts or signing on for major loans before you apply for a mortgage. Get your hard inquiries done well before taking out a major loan. Keep your utilization score down either by requesting a higher credit limit for your revolving lines of credit or by keeping your debt levels low.
Most importantly, always pay your bills on time. Even one missed payment can haunt your credit score for the next seven years. If you miss a payment deadline, pay the amount due in full as soon as possible to minimize the damage to your credit score.
If you believe a mistake has depressed your credit score, you can contact the major credit bureaus to have it fixed. If you’re intimidated by the process or unsure where to start, look into credit repair companies. These companies specialize in fixing credit score errors.
Talon Abernathy is a freelance writer, former teacher, and author. He has written on a broad variety of topics including SaaS for business, the legal industry, and personal finance and investing. He excels in simplifying complex topics while writing with an eye toward SEO and reader satisfaction.