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How Long Does it Take to Build Credit?

Building credit takes a few months tops, but building great credit may take a little longer. It all comes down to your financial habits and the number of accounts you have. Anyone can build credit whether starting from scratch or working up from a low score.

In a Nutshell: How Long Does Building Good Credit Take?

Good credit gets you far in life. You get better interest rates and higher loan amounts. You may even get lower insurance rates or pay fewer fees on a mortgage. But how long does it take?

It depends on your circumstances. Are you starting from scratch with no credit? Do you have a low credit score that needs improving? Building credit back up takes longer than building it from scratch because you have to ‘undo’ the damage you’ve done.

Each credit event and type of credit affect your credit score differently. Credit cards have the largest effect on your credit score, both positively and negatively depending on how you use them. Other types of credit, including installment loans and mortgages, also help your credit score if you use them properly.

Learn how you too can build credit quickly.

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How Long Does it Take To Build Good Credit?

Whether you have bad credit or just a little credit, you may wonder when you’ll start seeing your scores go up.

It takes time. Just how much time depends on the situation. How many credit lines do you have? How well do you pay your bills? What credit score are you looking at? VantageScore can provide you with a credit score in as little as a month whereas FICO takes six months or longer.

If you want good credit you have to do a few things:

How Long Does it Take to Build Good Credit From Nothing, Zero, Scratch?

If you have nothing, not even a secured credit card, you are starting from scratch. While it sounds intimidating, it’s not. You can build good credit from nothing in as little as three to six months. It all comes down to regular credit activity and good credit habits.

How can you build a credit score from scratch? Start with a credit card. You may have to get a secured credit card if credit card companies won’t give you credit with a thin credit file.

Why credit cards? Two reasons:

If you can use your credit card monthly, keep the balance at less than 30% of the available credit and pay the balance in full each month. Follow these rules and you’ll be well on your way to a good credit score within six months.

How Long Does it Take to Build Up From Bad Credit?

Unfortunately, going from bad credit to good credit isn’t a one-size-fits-all approach. It depends on the reason for the bad credit. For example, if you have a bankruptcy or foreclosure, those will affect your credit score negatively for a longer time than if you have bad credit from a few late payments. Most bankruptcies and foreclosures affect your credit score for 7 – 10 years.

Late payments, on the other hand, typically affect your credit score for 18 – 24 months. Just how long they affect it depends on the severity of the late payments. How many late payments do you have? How late are they? How quickly can you get your payments caught up? Your payment history makes up the largest portion of your credit score, so getting caught up is crucial.

How Long Does it Take to Build up Credit After a Chapter 7 Bankruptcy?

Chances are that if you filed bankruptcy, you already hurt your credit. While your bankruptcy itself will make your score drop, it’s not the end of the road. With a few simple steps, you can increase your credit score quickly.

The best thing to do after your bankruptcy discharge is to build your credit back up. You’ve wiped the slate clean and now it’s time to fill your credit report with good credit.

You can do this by obtaining a credit card. Most people need a secured credit card versus unsecured after filing bankruptcy. A secured credit card requires a security deposit but otherwise works just like a regular card. If you miss your payments, the credit card company has your security deposit to use.

The key is to use the credit card responsibly. Start by charging items that you would normally buy and then pay the card off in full at the end of the month. This shows responsible use of credit.

As you build up your credit history, apply for unsecured credit cards or personal loans. Don’t get out of hand — keep the debt manageable, but show that you are financially responsible now. In as little as one year, your good credit habits could boost your score back up to average.

How Long Does it Take to Build Credit with a Car Payment?

Car loans help build your credit score when you make timely payments. The payment history itself helps your credit score as it’s the largest component of both VantageScore and FICO scores. Car payments also help diversify your credit mix. In other words, you have installment (fixed loan payments) and revolving debt (credit cards). Showing that you can responsibly handle this mix of credit can help your score.

If you only have a car loan, though, your credit file may be considered ‘thin.’ In other words, there’s not much for creditors to go off of when looking at your credit history. While an open car loan — meaning you’re still paying the balance — has a greater impact on your credit score than a paid off loan, there still needs to be other types of credit mixed in there to help your credit score increase.

Without other types of credit, it could take close to a year for your car payment to help your credit score. If you have other types of credit, though, the car loan can help ‘boost’ your credit score along faster.

How Long Does it Take to Build Credit with a Credit Card?

Credit cards can be very helpful when building your credit score. They offer a revolving credit line that allows you to spend money, pay it off and spend it again. The credit bureaus consider several factors when looking at your credit cards:

If you regularly use your credit card, pay it on time, and keep the balance low, it can help you build a credit score within a few months. Remember, though, even one late payment can make your credit score drop fast.

How Long Does it Take to Build Credit without a Credit Card?

If you aren’t a fan of credit cards or don’t trust yourself, you can build credit with other types of loans:

If you don’t want to take out your own loan or open your own credit card, you can also ask a trusted family member or friend to be an authorized user on their credit card. As long as the credit card reports authorized users to the credit bureaus, you can take advantage of your family member or friend’s good credit and financial habits and let it help your credit score.

Bottom Line

If you want good credit, you have to use your credit responsibly. This means paying your bills on time, keeping your outstanding credit to a minimum and diversifying your types of credit. With the right habits, you can build a decent credit score in a few months and a good credit score in as little as one year.