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Building a good credit score takes time, when building your credit from scratch, you can typically expect to see a score within six months. If you’re working to rebuild your credit after financial setbacks that resulted in a drop in your credit score, repairing your credit comes down to ensuring you’re being financially responsible from here on out.
Establishing a good credit score doesn’t happen overnight, and sometimes it can feel impossible to recover from financial setbacks. There’s no solid timeline for building good credit, but it’s important to understand how your credit score is calculated so you know what actions you can take to get your credit in good standing. Read on to find out how long it takes to build good credit, as well as tips on maintaining and building your credit score.
How long does it take to get a credit score?
Building up your credit score starts with the basics—using credit. Opening a credit card or becoming an authorized user are two ways to start building your credit from the ground up. Many people think that you start with a credit score of zero and have to work your way up, but you’ll typically start with a score around 500 to 700, depending on the health of your credit history thus far.
As mentioned, it can take up to six months to build enough credit history to obtain a credit score. Credit scores range from 300 to 850, with a score over 670 being considered a good credit score.
While establishing a score can take up to six months, working your way up to an excellent credit score can take much longer. Your credit score will typically update every 30 to 45 days, and building good credit will take years of consistent and responsible credit use.
How are credit scores calculated?
The credit score you receive is calculated based on your borrowing history. There are five main factors that determine your credit score. These factors include:
- Payment history (35 percent)
- Credit utilization (30 percent)
- Length of credit history (15 percent)
- Different types of credit (10 percent)
- New credit (10 percent)
Since the length of time you’ve been building your credit plays a role in your credit score, building it up to an excellent score can take some patience.
How to increase your credit score now
If you’re new to credit and just beginning to build your credit history, applying for a credit card is a quick way to start building your credit score. Your information is reported to the credit bureaus every 30 days, so it’s an easy way to start building credit quickly.
Besides getting a credit card, make sure you’re making your payments on time every month, since your payment history is worth 35 percent of your credit score. Make at least the minimum payment on time each month and your healthy payment history will be reported to the credit bureaus monthly. This healthy history can help you increase your credit score over time.
Lastly, reducing your available amount of credit can play a significant role in increasing your credit score. If you’re able, increasing your credit limit or paying down your debts in lump sums can help free up some of your available credit. Remember, credit utilization accounts for 30 percent of your credit score—keeping your credit utilization ratio as low as possible is key to improving your credit score.
What to avoid when building your credit score
Unfortunately, when it comes to credit, one financial mishap could end up costing you—sometimes taking years to recover from. To maintain an upward trend of positive credit history, you’ll want to avoid these common mistakes:
Since your payment history accounts for 35 percent of your credit score, missing even one payment can be detrimental, as it can stay on your credit report for up to seven years. Late payments are usually reported 30 days after their due date.
Applying for multiple credit cards or loans
When applying for a credit card or loan, creditors run a hard inquiry to assess credit history and determine the trustworthiness of a borrower. One hard inquiry doesn’t have much of an impact on your credit score and may only drop it by five points. However, having multiple hard inquiries in a short amount of time can hurt your credit score and make you seem like a risky borrower to lenders.
Defaulting on a loan
Defaulting on a loan occurs when you’ve failed to make payments for a consecutive period of time. Your credit score drops every 30 days that you’ve missed a payment, and failure to pay can have an extreme impact on your credit score. If too much time passes, lenders can contact the credit bureaus, resulting in a credit score drop.
If you continue to fail to make a payment on a loan your account could be sent to collections by the loan issuers, where legal action can take place. Depending on the type of loan you have, lenders may try to garnish your wages or take your assets.
Using too much available credit
Your credit utilization accounts for 30 percent of your credit score, making it one of the most important factors contributing to your score. If you use too much of your available credit, your credit score can take a serious hit. For example, if your credit limit is $4,000 and your current balance is $3,000, that puts your credit utilization at 75 percent, which is significantly higher than recommended.
Additional tips for building and maintaining a good credit score
Now that you have a solid understanding of what can hurt your credit score, let’s take a look at how you can increase and improve your credit score.
Open a secured credit card account
Secured credit cards are best for individuals who have no credit or have a low credit score, and they work to help borrowers build or repair their credit. Unlike traditional credit cards, secured cards require the borrower to put down a cash deposit, which can be used to settle any unpaid debt should the issue arise.
In most cases, the amount you put down will be equal to your available credit amount. For example, to get a credit limit of $1,000, you’ll typically need a deposit of $1,000. Credit limits for these cards are traditionally lower than unsecured credit cards and have higher interest rates.
If you’re working on building your credit from the ground up or repairing your bad credit, a secured credit card can be a good option to help build your creditworthiness. Once you’ve built up your credit and have remained a responsible borrower, you can move your way up to an unsecured credit card.
Become an authorized user
If you’re just starting to build your credit, you may not be approved for a traditional credit card just yet. In this case, becoming an authorized user on someone else’s credit card is an easy way to start building your credit history.
As an authorized user, you’ll have access to a credit card and can use it as such, but the primary holder of the account will be legally responsible for the debt. This option is best for those building their credit history from scratch, but it shouldn’t be used as a long-term option.
Apply for a credit builder loan
A credit builder loan is an option for those with no or low credit history looking for a low-risk way to build their credit. Unlike a personal loan, a credit builder loan essentially works backwards—the lender puts your approved loan amount into a savings account, you repay the loan over time and once the loan is paid off, the lender releases the funds to you. This allows you to build a solid payment history, thus increasing your credit score over time.
Keep balances low
Experts suggest that your credit utilization ratio should always be below 30 percent to maintain a positive credit score. If you can, consider paying more than the minimum payment each month to ensure your credit utilization ratio stays as low as possible. So long as you’re paying off high balances before the next reporting period, your credit score should not be negatively impacted.
Pay credit card bills on time
Since payment history is the leading factor in your credit score, it’s important to be on top of your monthly payments. If needed, set up an automatic payment system so you never have to worry about making your payments on time each month.
Don’t close unused credit cards
If you’re not using a credit card, keeping the account open won’t hurt your credit score, but closing the account can. The length of your credit history impacts your credit score, so keeping any accounts open can help build your credit history and increase your total available credit, boosting your score over time.
Monitor your credit report
If you’ve been a responsible borrower and see sudden drops in your credit score, check your credit report and look for any discrepancies. If there are errors on your report, dispute the errors immediately to get them removed. The longer those errors stay on your report, the more damage they can do to your credit score.
Building credit takes time, and getting your credit score in good standing takes years of consistent and responsible credit management. Make sure you understand the ins and outs of credit score ranges, and follow the tips in this article to help build and maintain good credit.
Reviewed by Miriam Allred, an Associate Attorney at Lexington Law Firm. Written by Lexington Law Firm.
Miriam Allred was born and raised in Southern California. After high school she joined the US Navy. She then went on to get an Economics degree from Chapman University where she got to enjoy an internship at the United States Supreme Court. Miriam then went to Brigham Young University where she received her Juris Doctor. Prior to joining Lexington Law, Miriam worked as a civil rights attorney dealing with discrimination and sexual harassment. In this role she helped write and create policies and investigate sexual harassment and discrimination complaints. Miriam also has experience in family law. Miriam is licensed to practice in Utah.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.