How Long Does It Take To Increase Your Credit Score?

When it comes to credit, there is no one-size-fits-all solution to raising your score. There are things you can do to help get your credit score more in line with where you want it to be, but the road to excellent credit won’t be the same for everyone. However, knowing what impacts your score can give you an edge when strategizing how you use credit and give your score a boost.

How credit scores work

Credit scores reflect your creditworthiness and likelihood of repaying debt. These scores are primarily based on the information found in credit reports from the three major credit bureaus: Experian, Equifax and TransUnion.

Lenders and creditors use credit scores to assess the risk of extending credit to an individual, with higher scores indicating lower risk. Maintaining a good credit score requires responsible credit behavior, and regularly monitoring credit reports and scores can help you identify and address any issues that may affect your creditworthiness.

Raising your score depends on your starting point

Your credit score is typically determined through a formula considering five primary factors. Most people apply for and open credit cards to build credit, but there is more to it than just that. People with good credit exercise financial responsibility by paying their balances on time and keeping all the factors that go into a credit score at the top of their minds. Listed in order of importance, each of the following factors can raise or lower your credit score:

Payment history (35 percent)

You don’t need to go into debt to build credit. A history of consistent on-time payments is the most influential factor in your score, so being new to credit makes it easier to raise your credit profile. Every month you pay your cards on time will bump up your credit score. If you set a routine, you’ll likely be able to grow your creditworthiness quickly — as long as you can avoid missing a credit card payment.

Credit utilization (30 percent)

Your credit utilization ratio (also called your debt-to-available-credit ratio) is the total amount of credit you’ve used compared to the amount available to you across all your lines of credit. If you have multiple credit cards, your total credit limit is the sum of each individual credit limit on your cards. The more cards you have, the more credit you’ll have available. Typically, you want to keep your total credit utilization below 30 percent to stay in good standing, but FICO goes a step further and suggests using less than 10 percent of your available credit.

Length of credit history (15 percent)

The length of credit history refers to the average age of your credit accounts. The longer the account has been open, the better, so you may want to avoid closing an old account to keep yourself from a poor credit standing. In some cases, canceling a credit card account is the right move, but as a general rule, you’ll benefit from keeping old ones open.

Credit mix (10 percent)

Adding new types of debt to your profile, such as personal loans or auto loans, will give you a healthier credit mix and potentially raise your credit score. Opening new credit card accounts and other debt is generally beneficial if you can manage the payments. But you should avoid applying for multiple new credit sources all at once. Credit issuers may see you as a high-risk applicant, and it may become too much of a financial burden to bear.

New credit (10 percent)

Each time you open a new credit account, the lender conducts a hard credit inquiry that will temporarily ding your credit score. If you have too many of those hard credit checks in a short time frame, that can raise an alarm among lenders because it looks like you’re in need of quick credit. Therefore, be thoughtful about when and how often you apply for new credit.

How long does it take for your credit score to go up?

The time it’ll take to raise your score depends on the reason your score is low in the first place. If your score is low because you don’t have much credit history or you’re just starting your credit-building journey, you may be able to boost your score within months. But if you’ve hurt your creditworthiness through missed payments or going through bankruptcy, making your way back to a healthy credit score will take even more patience.

If you want to boost your credit score after missing credit card or loan payments, declaring bankruptcy, defaulting on a loan, having a loan turned over to a collection agency or experiencing any other major financial issues, know that it can take years to rebuild your credit. But in nearly all cases, the process begins with putting in the time to manage your budget and cutting back on spending so that you can make consistent, timely payments every month.

However, there is data available from FICO that suggests how long it may take to bring your score back to its starting point after a financial mishap. The following data is an estimate of recovery time for people with poor to fair credit.

How long do derogatory marks stay on your credit report?

The three major credit bureaus record your credit hsitory and then FICO or VantageScore use that information to calculate your score. It’s up to your lenders to contact the bureaus to report information about you so that score can be generated. This can be as simple as your credit card company reporting that you made a monthly payment on time, increased your debt repayment or decreased your balances. Each of these actions positively influences your score, but there may be a slight lag in the timing of when your score will actually change due to the reporting process.

In addition to a potential delay in the telephone game between your credit issuer and the credit bureaus, certain financial events can linger on your credit history for years. Unfortunately, the more harmful events are often the ones that stick around the longest, so it’s best to know what actions will be the most significant burdens:

This information may seem ominous, but here’s encouraging news: Even if they’re still present, the old items that appear on your report have less weight than your newer ones.

Top ways to raise your credit score

You can do several things in the short term to try to better your credit score.

Improving your credit utilization will likely have the quickest impact. You can accomplish this by paying down debt, upping your credit limit or opening a new credit account. Additionally, there are a couple of other things you can do to start your journey to an increased score, including the following:

• Make credit card payments on time. Paying your bills on time is beneficial for people with no credit history because you have the chance to prove yourself by being consistent right off the bat.
• Remove incorrect or negative information from your credit reports. Often, you can challenge old information or dispute errors on your credit report to attempt to get the event removed.
• Hold old credit accounts. Keeping accounts open that improve your length of credit will help your score as you better your habits.
• Become an authorized user. When an account holder adds you to an existing credit card account as an authorized user, you add information to your credit history by piggybacking on someone else’s. However, verify the account reports to all three major credit bureaus so the data shows up on your credit report.
• Use a secured credit card. A secured credit card is your best option when you have no credit and can help you build up your credit score by generating a history of responsible use. Secured credit cards require a deposit to obtain a line of credit, and the line of credit is usually equal to the initial deposit.
• Report rent and utility payments. A history of on-time rent and utility payments can benefit your credit. Still, if your landlord or property management company isn’t already reporting your rent payments, you may need an alternative reporting service. For example, you may be able to use Experian Boost to add these accounts to your credit history.
• Minimize credit inquiries. Every time you apply for a new credit card, your credit score takes a hit. You can avoid any unnecessary dings to your credit by researching credit options that are best for your financial needs. A service like CardMatch can help you find pre-qualified credit card offers before applying.

The bottom line

Although you can get a credit card with no credit at all, it’s preferable to establish and build your credit profile so you qualify for the best loan terms and financial products. As with many of life’s problems, there’s no better time to address a low credit score than now. By making on-time payments and carefully assessing your financial needs, you will be on the right track toward building strong credit.

Remember that the path to financial recovery takes time, sometimes even years. However, regardless of the dilemma you may find yourself in, a proactive approach is the best way to build credit responsibly. Your credit score will thank you in the long run.