How long does it take to build credit? If you want to borrow some money but you have poor credit or worse, you don’t have a credit score in the first place, it can easily feel like forever before lenders can consider your number acceptable. But, by making some positive changes to your habits in credit management, it can take as little as one month for you to see improvements in your credit score. Keep reading about how long does it take to build credit.
Building Credit From Scratch – How Long Does It Take?
In order to generate a score, you will be required by FICO to have at least a single credit account that has been open for 6 or more months and a minimum of a single account with reported activity to the credit bureau for the past 6 months. It is possible that just one account can already meet these requirements.
The third requirement of FICO to generate a credit score is the fact that your credit reports should have no indication at all that you already passed away. Now, this might sound a bit strange but this can happen if an account is shared with a person who was already reported deceased.
When it comes to what your generated score is going to be, this will depend on your open accounts and how much you use your credit.
As you get started in building credit, it is important that you set off on the right foot. Thus, you have to ensure that all of your payments are made on time each and every time. You should also try paying down all of your balances in full. The process of building your credit will only take longer if you overextend yourself right from the get-go.
How Much Time Do You Need to Improve Credit Score?
It can be very tricky to provide a specific timeline for improving bad credit score. For starters, it mainly depends on how bad the score. It can take a few years for you to build it up again if you are dealing with a quite serious damage.
For instance, a serious negative mark like a bankruptcy, foreclosure, or a collection account will remain on your credit record for up to 7 years. But still, their effects are going to fade after some time. For example, FICO stated that a 5-year old collection account can drag down your score less than one that is only 5 months old.
Good thing is that if you have a low score, all the positive changes you make will probably have a substantial effect. For example, going from poor credit score of around 500 to a fairer credit score can take about 12 to 18 months of using your credit responsibly.
The moment you step into the zone of good credit, never expect that your credit will take on a steady rise. Improving your credit score can even get more challenging as it gets higher. After you reached the 700-800 tier, you will already have exceptional credit habits so you might find it hard to take actions that can significantly change that.