How Long Does It Take to Build Credit

Original Post: August 27 2020

The consensus from credit bureaus and lenders is that it takes at least 6 months to build up to a good credit score. While this is generally true, this post is going to break down that 6 month number and help you understand if you can get there faster or why it might take you longer to build credit. Lastly, we’ll cover specific circumstances where you can change your credit score quickly and safer ways to build credit when you have a low score.

  • Check your credit. Do you have no credit history or bad credit history?
  • No credit history?
  • Bad credit history?
  • Fast ways to change your credit score!
  • Credit-building options without actually getting a loan

Check your credit. Do you have no credit history or bad credit history?

There’s a big difference between building credit when you have no credit history versus trying to repair a bad credit history. Don’t know where you stand? You can use this link provided by the US Federal Trade Commission to check your credit score free credit report sources!

No credit history?

If you have no credit history, the bad news is it will take 6 months and there are no real shortcuts. This is because it takes 6 months of reporting for FICO to generate a credit score for you. However, the silver lining is that you have a clean slate! Your path to building credit is straightforward, if you make payments on time and keep your overall use of credit low then you’re well on your way to a great credit score! Skip below for our suggestions on safe ways to build credit history!

Bad credit history?

Rebuilding a bad credit score often takes longer than getting a new score from scratch. This is because your credit score is an average of all your history over the last 7 years. Older bad credit actions will weigh down your score so your goal will be to try to out number them with better recent credit information. The credit bureaus also know that people change a lot in 7 years so they give more weight to recent information over older items. This means you should not try to wait out a bad credit score! The sooner you start adding good recent credit behavior, the sooner your score will start to turn around. How long it will take to build credit unfortunately depends on how bad your credit was originally. The good news for very low starting credit scores is you can see increases in your credit score as early as 3 months! The less good news is that you have a longer way to go to reach what banks consider “good credit” so it will still take time.

Fast ways to change your credit score!

While building truly good credit is a long term game, there are some things that can change your credit score quickly if they apply to you! These are specifically related to removing accounts from your credit score.

  1. Fixing mistakes on your credit report
  2. If you see accounts on your credit report that don’t belong to you, getting them removed can improve your credit score overnight!
  1. Remove bad accounts where you are an authorized user
  2. Even though you may not pay the bill for the card, authorized user accounts still count towards your credit score!

    If you are an authorized user on someone else’s credit card, you can call the number on the back of your card to have yourself removed

    Depending on the card balance and age of the card, this can be a double-edged sword on your credit so use with caution!

  3. Pay for delete
  4. Medical and utility collections agencies sometimes offer pay for delete settlements where they will remove the account from your report if you pay off the debt.

    As a general rule of thumb, removing negative items on your credit will have a larger positive impact on your credit than most individual good items.

    Credit-building options without actually getting a loan

    One of the original challenges to building credit was that you had to borrow money in some way to build history. However, today there are a few ways to build credit without taking on the risks and costs of a traditional loan.

    1. Getting added as an authorized user
    2. Copied from above, even though you may not pay the bill for the card, authorized user accounts still count towards your credit score!

      This is a great way to build credit if you have someone you trust, like a parent or sibling, who has good credit and is willing to add you to one of their cards

    3. Credit builder loans

    4. If you don’t need money today, credit builder loans are a great way to build credit and savings. It’s essentially like a reverse loan where the lender puts your loan proceeds into an escrow account for you, then when you pay back the loan they give the principal back to you! Our guide on credit builders can help you better understand how a credit builder loan works.

    To learn more about other credit building options, you can check out our post on how to build credit!

    Building credit takes a little patience, but the rewards are well worth it when you find yourself needing credit for a big purchase or job application. Did we miss any tips you’ve encountered? Not sure how to make the choice between credit building options? We’re happy to help you think about the answer, you can reach us at service@figloans.com, Facebook, Instagram, and Twitter.