A Guide To How Long It Takes to Build Up Your Credit

Key Takeaways

  1. Building credit requires consistent, on-time payments and managing credit utilization over time, with no set timeline for improvement.
  2. The five main components that influence credit scores are payment history (35%), credit utilization (30%), length of credit history (15%), types of credit (10%), and new credit (10%).
  3. Using secured credit cards, keeping credit utilization low, and checking for report errors can help build credit faster.
  4. Secured credit cards and credit builder loans are effective for those starting to build credit, offering a low-risk way to demonstrate creditworthiness.
A Guide To How Long It Takes to Build Up Your Credit

There’s a game that no one likes to play. . .the waiting game. Especially when it comes to building up your credit. After all, you make payments on your credit in full and on time, and yet it takes several months for your credit score to go up only by a few points. (Not to mention how much it goes down with hard inquiries or closing a credit card or loan.)

However, it’s a waiting game we all have to play eventually, and there are things you can do that are within your power to win it. It takes time, effort, dedication, and consistency, but it’s well worth it!

Obviously, there’s no definite answer for how long it takes to build credit. There are a lot of moving variables that make up the answer that is unique to each person. But there are things you can do to speed up the process.


Overview of Credit & Credit Scores

Credit is a system that allows individuals and businesses to borrow money and pay it back over time. Credit scores are used to assess a person's creditworthiness, or their ability to repay a loan.

Credit scores are important, because they can affect your ability to get approved for loans, the interest rates you pay, and the terms of your loans. A higher credit score generally means you will be more likely to get approved for loans, and you will likely pay lower interest rates.

There are a number of factors that affect your credit score, including:

  • Payment history: This is the most important factor in your credit score. It accounts for 35% of your score.

  • Credit utilization: This is the amount of debt you are using compared to your available credit. It’s usually expressed as a ratio, and accounts for 30% of your score.

  • Length of credit history: The longer your credit history, the better your score will be. It accounts for 15% of your score.

  • Types of credit: The variety of credit accounts you have can affect your score. It accounts for 10% of your score.

  • New credit: The number of new credit accounts you open can affect your score. It accounts for 10% of your score.

You can improve your credit score by paying your bills on time, keeping your credit utilization low, and having a long credit history. You can also get a copy of your credit report from each of the three major credit bureaus once per year at AnnualCreditReport.com.


Building Credit: Time Factors & Strategies

Credit helps you purchase cars, homes, and college education. Credit can also be used to build a positive credit history, which can be helpful in obtaining loans and other financial products in the future.

As mentioned above, there are so many moving parts to determine how fast any individual will be able to improve their credit. Here are the most common factors:

  • The length of your credit history: The longer your credit history, the more time lenders have to assess your creditworthiness.

  • The amount of debt you have: The more debt you have, the lower your credit utilization ratio will be, which is a good thing.

  • Your payment history: Making on-time payments is the most important factor in building good credit.

  • The types of credit you have: Having a mix of different types of credit, such as credit cards and loans, can help you build a more robust credit history.

All of these factors can be used within key strategies that can help you to build your credit faster.

The first is to apply for something called a secured credit card. A secured credit card is a good option for people with no credit or bad credit. With a secured credit card, you put down a deposit that becomes your credit limit, different from a regular credit card.

Making on-time payments may sound obvious, but it’s underrated as probably THE best thing you can do to grow your credit sustainably. This pairs well paying in full each month to save on interest.

Keep your credit utilization low is a key strategy, too. Your credit utilization ratio is the amount of debt you have compared to your credit limit. Sometimes making those minimum payments isn’t good enough to boost your credit at the speed you want to. It’s all about the magic ratio—aim to keep your credit utilization below 30%.

Once you get a free copy of your credit report, you can also look for and dispute any errors that you find on it with the credit bureau. You’d be surprised what some people find on theirs.

Building good credit takes time and effort, but it’s worth it. A good credit score can help you qualify for lower interest rates on loans, which can save you money in the long run. It can also help you get approved for other financial products, such as apartments and cell phone plans.

Starting Point: Establishing Credit

Yes, it’s difficult to acquire great loans with low interest rates when you have no established credit, but you have to start somewhere. There are some great types of credit choices out there meant for those just starting out to help them begin their credit building journey.

Establishing credit can help you qualify for loans, rent an apartment, and even get a job in some cases. If you don't have any credit history, it can be difficult to get started. However, there are a few things you can do to build credit from scratch!

One option is to get a secured credit card, as mentioned above. With a secured credit card, you put down a deposit that becomes your credit limit. This prevents you from spending what you don’t have, encouraging you to establish healthy money habits, all while improving your credit as you pay it back on time. You use the card and make payments just like you would with a regular credit card. Your payments will be reported to the credit bureaus, helping you build a positive credit history.

Another option is to become an authorized user on someone else's credit card account. This means that you will be added to the account as a secondary user, and you will be able to use the card and make payments. The account owner's credit history will be reported to your credit report, which can help you build your own credit history. This is an option some parents choose to do for their children, so that their children have some sort of established credit before they start using their own credit card.

Timeline For Credit Improvement

The journey towards noticeable changes in credit scores varies based on individual circumstances. Generally, it takes about six months to a year of consistent, positive financial behavior. However, this can vary depending on other factors, such as the severity of your credit problems and how quickly you take steps to improve your credit.

Several factors influence the pace of credit improvement. Timely payments on loans and credit cards, maintaining low credit utilization (below 30%), and the length of your credit history can expedite progress. On the contrary, late payments, high credit card balances, and recent negative marks can slow down improvement. Opening multiple new accounts in a short span (having too many hard inquiries) may also temporarily lower scores.

Realistic expectations will be your best friend on your journey to building your credit. While quick fixes are rare, gradual credit score progress is attainable. Expect your score to gradually rise over time as you consistently manage your finances responsibly. Aim for steady improvement rather than rapid changes. Remember that negative marks, like missed payments can stay on your report for up to seven years, but their impact lessens over time as positive behavior takes over.

Here are some realistic expectations for gradual credit score progress:

  • If you have good credit, you can expect your score to increase by 10-20 points per year.

  • If you have fair credit, you can expect your score to increase by 20-30 points per year.

  • If you have bad credit, you can expect your score to increase by 30-50 points per year.

It’s important to remember that these are just estimates and your actual results may vary. The most important thing is to make positive changes to your credit habits and be patient. With time and effort, you can improve your credit score and achieve your financial goals!

Credit Builder Loans As A Credit Building Tool

Similar to a secured credit card that we’ve previously mentioned, credit builder loans are meant for individuals with poor or no credit, and you receive the loan funds after you’ve paid off the loan in full. It’s primary purpose is to provide you with the opportunity to show that you can responsibly pay back on credit, while keeping the risk low for the lender and borrower.

While not right for everyone looking to improve their credit, they are a great choice for those looking to prove their creditworthiness in a low-risk manner. Here are some benefits of choosing a credit builder loan:

First, if you make your payments on time and in full with your lender, they can help you to establish good rapport and a financial relationship built on trust. If this happens, they are very likely to lend to you in the future for traditional loans and credit cards with better interest rates.

Second, it provides a low-risk and structured environment to build your credit in. The risk is lower for the lender, as they aren’t providing the funds until they have received their money back, plus interest, and the risk is lower for the borrower as well, as they aren’t tempted to spend all of the funds right away, as they don’t receive it until it’s been paid for—they earn it!

Last, but certainly not least, credit builder loans are a great way to begin to instill better financial habits in yourself. Borrowers usually have great educational resources for financial literacy, like budgeting and credit education, to help you in your journey with money.

Monitoring Your Credit Progress

Monitoring your credit progress is essential for maintaining a healthy financial profile. Regularly checking credit reports and credit scores is a fundamental practice. By obtaining free annual reports from one of the three major credit bureaus, individuals can spot errors or fraudulent activities. Tracking credit improvement and identifying areas for improvement involves noting the positive impact of making payments on time and responsible credit use. This awareness motivates you to make better financial decisions, and encourages you to work on possible weak points, such as reducing high credit card balances.

Utilizing credit monitoring services can provide you with 24/7 peace of mind that your credit is secure. These services offer real-time updates on credit changes, including inquiries and account openings, enabling rapid response to suspicious activities. They also provide credit score tracking, helping individuals gauge the effectiveness of their efforts over time. Through constant oversight, credit monitoring services empower individuals to catch potential problems early and maintain control over their finances.

Overcoming Credit Building Challenges

Overcoming credit building challenges requires strategic actions and perseverance. When faced with financial setbacks, it's important to maintain positive credit behavior, like making consistent payments on existing debts. This demonstrates resilience to lenders and gradually rebuilds credit trust.

Addressing negative credit information and resolving credit disputes demands a proactive approach. Individuals can challenge inaccuracies through credit bureaus, ensuring that their reports reflect accurate data. Timely resolution enhances creditworthiness, too.

In complex credit situations, seeking professional financial advice may be needed. Credit counseling agencies offer expertise in creating actionable plans to tackle debt and improve credit. They guide individuals on budgeting, debt management, and negotiation with creditors. For severe cases, bankruptcy attorneys are able to provide legal guidance.


Bottom Line

Building credit is a waiting game that demands patience and strategy. But it’s a game you CAN win. While timely payments and responsible financial decisions might not yield instant results, they pave the path to a stronger credit score and build it up within a year.

There are different tools you can use to help you to establish and build up your credit, like secured credit cards, credit builder loans, or signing on to someone else’s credit.

About The Author

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Bryan Huynh

Product Tester & Writer

Bryan Huynh, a committed Product Tester and Writer, ensures that you are well-informed, guiding you in discovering and comparing top-rated financial services, including personal loans, business loans, credit repair, and tax relief.

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