How long does it take to build credit?

In a nutshell

The time it takes to build credit from nothing varies. Establishing a general credit history generally takes three to six months. Establishing a good score usually takes around one year, while reaching an excellent score can take five years or longer.

• Generally, you can expect a timeframe of about 3-6 months to establish a basic credit profile. Opening a secured credit card or credit-builder loan can help at this stage.
• Achieving a credit score in the good to excellent range, which typically means a credit score in the 690s and above, can take much longer.
• There are some ways to quickly boost your score by a few points, such as checking for inaccuracies or mistakes in your credit report, and disputing them with the credit reporting agencies.

How a credit score is calculated

How a credit score is calculated can vary slightly, depending on the credit scoring mode being used. However, certain factors are used in most credit scoring models, and you can expect them to strongly influence your credit score.

Here are some of the primary factors:

• Payment history: Your payment history is generally the most important credit factor. This shows whether you have repaid credit on time in the past.
• Amounts owed: How much you owe compared to your total available credit – known as credit usage or credit utilization – is another important credit factor.
• Length of credit history: The average age of your credit accounts is also an important credit factor. Creditors generally like to see you’ve been using credit for several years.
• Credit mix: Having several types of credit accounts, like credit cards, personal loans, and a mortgage, can help your credit score.
• New credit applications: Opening new credit usually results in a hard inquiry, which will temporarily reduce your credit score.

These are the most common credit scoring factors, but different models use different factors. For instance, models like the FICO® Score and the VantageScore weigh credit factors differently. To get a good idea of your credit score, you should check your score with multiple companies.

How to start building credit

If you are starting from scratch, you can build credit in several ways. A good first step is to open a secured credit card or credit-builder loan. These products are specifically designed for people with imperfect or minimal credit. Paying them on time can be a great way to start building credit.

Another option is to become an authorized user for the credit card of someone you know with excellent credit. Whether you use the card or not, the primary user’s payment activity will become part of your credit history, helping you build credit.

Once you get the ball rolling, the next step is to practice responsible credit habits. This means consistently paying your bills on time and keeping the amounts you owe low. Doing this will help you establish a strong credit history and raise your score over time.

How long does it take to improve your credit score?

Credit scores are calculated according to multiple factors, so the time it takes you to improve your credit score may not be the same as it is for another person.

Your starting point also matters. For instance, consider the following starting points and how they might affect your progress:

• Low score (500s or below): With a low credit score, it might take years of responsible credit use to reach the good to excellent range.
• Fair score (Low to mid-600s): You could move into the good to excellent range within a year or two.
• Good score (700s): Though you already have a good score, it may take a few years to boost it to the excellent range.

Missing payments or defaulting on a loan can also affect your credit score long into the future. For instance, minor late payments might disappear after one year, but if you’ve had a major delinquency it can take up to seven years for that to drop from your credit report. If your account has a charge-off, those can linger even longer.

Fastest ways to improve your credit score

Improving your credit score takes time, and you usually can’t do it overnight. However, there are some steps that can give your credit card a quick boost.

• First, check your credit reports, which you can now do weekly on AnnualCreditReport.com. Look for inaccuracies or mistakes in your report and dispute them with the credit reporting agencies. This can give your credit score a quick bump.
• If you have any delinquencies or accounts in collections, try contacting creditors and negotiating settlements. Paid or settled accounts may have less impact on your credit than unsettled ones.
• Finally, if you have any high-interest debt, make extra payments and pay it off early if possible. This can lower your credit use and improve your payment history.

You can also use secured credit cards and credit-builder loans where possible, using each credit product responsibly. Remember that building credit usually takes time, and focusing on long-term financial goals may be a better route to financial health than trying to build your credit score by taking out unaffordable loans.

You should also be careful about financially risky behavior, like taking out several new credit cards at once, as this can make you seem a bigger risk for creditors.

Frequently asked questions (FAQs)

Can I build my credit in 3 months?

While you may be able to establish an initial credit profile in three months, building a credit score is a long-term strategy. Raising your score can take years, especially if you want to be in the good to excellent range. However, steps like disputing errors on your credit report and settling debts in collections can give your credit score a quick boost.

How long does it take to build credit from 500 to 700?

500 is generally considered a poor credit score, and reaching a score of 700 from that point could take several years of responsible credit use. At this stage, you should focus on making payments on time to slowly raise your credit score.

How often does your credit score update?

The frequency of updates to your credit score depends on where it is being updated - different companies will update your score on their system on different schedules. However, lenders typically report information to credit bureaus once every 30-45 days, so changes can take at least this long to appear on your credit report.