Content of the material
- How long it takes to raise your score
- Add utility and phone payments to your credit report
- How much will this action impact your credit score?
- Does Paying Off a Loan Help or Hurt Credit?
- 5. Make the Most of a Thin Credit File
- The bottom line about building credit fast
- How Long Do Derogatory Marks Stay on Your Credit Report?
- How Long Does It Take to Rebuild a Credit Score?
- How Quickly Does Your Credit Score Update?
- How To Get Your Credit Score To 800
- How To Start Building a Good Credit Score
- Open a Secured Credit Card Account
- Become an Authorized User on Someone Else’s Card
- Get a Credit-Builder Loan
- See If Non-Credit Bill Payments Count Toward Your Credit History
- How Long Does It Take for Your Credit Score to Recover After Taking a Hit?
- What credit score do you start with?
- The truth about raising your credit scores fast
- 5 factors that affect your credit scores
- Monitor Your Credit for Free With CreditWise From Capital One
How long it takes to raise your score
The length of time it takes to raise your credit score depends on a combination of multiple aspects. Your financial habits, the initial cause of the low score and where you currently stand are all major ingredients, but there’s no exact recipe to determine the timeline. Thanks to studies done by CNBC and FICO, we’ve compiled the typical time it takes to bring your score back to its starting point after a financial mishap. The following data is an estimate of recovery time for those with poor to fair credit.
|Event||Average credit score recovery time|
|Home foreclosure||3 years|
|Missed/defaulted payment||18 months|
|Late mortgage payment (30 to 90 days)||9 months|
|Closing credit card account||3 months|
|Maxed credit card account||3 months|
|Applying for a new credit card||3 months|
Add utility and phone payments to your credit report
Typically, payments such as utility and cellphone bills won’t be reported to the credit bureaus, unless you default on them. However, Experian offers a free online tool called Experian Boost, aimed at helping those with low credit scores or thin credit files build credit history. With it, you may be able to get credit for paying your utilities and phone bill — even your Netflix subscription — on time.
Note that using Experian Boost will improve your credit score generated from Experian data. However, if a lender is looking at your score generated from Equifax or TransUnion data, the additional sources of payment history won’t be taken into account.
There are also services that allow rent payments to be reported to one or more of the credit bureaus, but they may charge a fee. For example, RentReporters feeds your rental history to TransUnion and Equifax; however, there’s a $94.95 setup fee and a $9.95 monthly fee.
How much will this action impact your credit score?
The average consumer saw their FICO Score 8 increase by 12 points using Experian Boost, according to Experian.
When it comes to getting your rent reported, some RentReporters customers have seen their credit scores improve by 35 to 50 points in as few as 10 days, according to the company.
Does Paying Off a Loan Help or Hurt Credit?
Paying off a loan frequently hurts credit because it impacts your credit history and your credit mix. If the loan that you have paid off is your oldest credit line, then the average age of your credit will become newer and your score will drop. If the loan that you pay off is your only loan, then your credit mix suffers.
5. Make the Most of a Thin Credit File
Having a thin credit file means that you don’t have enough credit history on your report to generate a credit score. An estimated 62 million Americans have this problem. Fortunately, there are ways to fatten up a thin credit file and earn a good credit score.
One is Experian Boost. This relatively new program collects financial data that isn’t normally in your credit report, such as your banking history and utility payments, and includes that in calculating your Experian FICO credit score. It’s free to use and designed for people with limited or no credit who have a positive history of paying their other bills on time.
UltraFICO is similar. This free program uses your banking history to help build a FICO score. Things that can help include having a savings cushion, maintaining a bank account over time, paying your bills through your bank account on time, and avoiding overdrafts.
A third option applies to renters. If you pay rent monthly, there are several services that allow you to get credit for those on-time payments. For example, Rental Kharma and RentTrack will report your rent payments to the credit bureaus on your behalf, which in turn could help your score. Note that reporting rent payments may only affect your VantageScore credit scores, not your FICO score. Some rent-reporting companies charge a fee for this service, so read the details to know what you’re getting and possibly purchasing.
A new entry into this field is Perch, a mobile app that reports rent payments to the credit bureaus free of charge.
The bottom line about building credit fast
When you’re working to fix your credit, it takes good behavior over time. However, lowering your utilization rate by paying down existing debt, getting a new credit card or requesting a credit line increase on an existing card can provide the quickest credit score boost.
Any late payments and debts sent to collection should be handled promptly — otherwise, they’ll just cause more pain once they hit your credit reports. It’s also wise to review your credit reports on a regular basis. in order to spot errors that might be dragging down your credit score.
Knowing what actions to take that can help improve your credit score and being a responsible borrower can boost your chances of increasing your credit score by 100 points or even more.
How Long Do Derogatory Marks Stay on Your Credit Report?
No one’s perfect, and that’s very clear when you’re dealing with credit scores and credit reports. Your credit report is a history of how you’ve handled credit in the past. If you’ve made mistakes, such as late or missed payments, those will stay on your credit report for a long time. But just how long depends on the type of derogatory mark:
- Late payments: Because lenders usually report to the bureaus every 30 to 45 days (roughly), you may have a small window of time after missing a payment to make it up before it appears on your report. But once a late payment is on your report, it will stay for seven years from the original delinquency date.
- Collection accounts: If you have an account that is sent to collections, the account will remain on your credit report until seven years after your initial missed payment that led to the account ending up in collections.
- Bankruptcies: Depending on the type of bankruptcy you declared, it will remain on your credit report for seven to 10 years.
- Other negatives: Other derogatory marks, such as repossession, will typically stay on your credit report for seven years from the date of the first payment you missed.
How Long Does It Take to Rebuild a Credit Score?
There’s no set timeline for rebuilding your credit. How long it takes to increase your credit scores depends on what’s hurting your credit and the steps you’re taking to rebuild it.
For instance, if your score takes a hit after a single missed payment, it might not take too long to rebuild it by bringing your account current and continuing to make on-time payments. However, if you miss payments on multiple accounts and you fall over 90 days behind before catching up, it will likely take longer to recover. This effect can be even more exaggerated if your late payments result in repossession or foreclosure.
In either case, the impact of negative marks will diminish over time. Most negative marks will also fall off your credit reports after seven years and stop impacting your scores at that point if not sooner. Chapter 7 bankruptcies can stay for up to 10 years, however.
In addition to letting time help you rebuild your scores, you can follow the steps above to proactively add positive information to your credit reports.
You may also hear about credit repair companies that offer to repair or “fix” your credit—for a price. It might seem tempting, but credit repair companies can’t do anything that you can’t do on your own for free. Similarly, you should be wary of so-called debt settlement companies that may encourage you to stop making payments in an attempt to try to “settle” the debt for less than you owe. Their plan can result in major credit score harm and may not even ultimately work to reduce your debt obligation.
How Quickly Does Your Credit Score Update?
Unlike a lot of financial metrics, your credit score doesn’t tick away silently in the background, changing without your knowledge. Instead, it’s recalculated each time you or a business requests it. If you request it often, it’ll update more frequently. Most popular free credit score websites request this information every month; that way, you get a new score update every 30 days.
It also depends on how often the companies you do business with report your information. For example, if your credit card company doesn’t report your payments until the end of the month, you won’t see the impact of your payments on your credit score until then, even if you pay it off at the beginning of the month.
How To Get Your Credit Score To 800
A credit score in the 800s is a remarkable milestone. Although it will take time, it’s completely possible to achieve. Here’s how to get started:
- Pay all of your bills on time.
- Never max out your credit cards.
- Don’t apply for every credit card you see.
An 800 credit score is a great goal but it’ll likely take many years to reach this elite status as credit scores factor account ages into the score. As your average account age grows, so can your credit score.
How To Start Building a Good Credit Score
Unfortunately, the tricky part about building a credit score is getting the credit you need to create a credit history for a score. Fortunately, there are a few ways to start establishing a credit history and a good score.
Open a Secured Credit Card Account
Secured cards are designed for those with no credit history or those who are rebuilding credit.
You can open a secured card when you aren’t eligible for other cards because this type of credit card requires a deposit. The deposit acts as collateral for the issuer if you stop making payments, so it’s less risky for them to approve you. Secured card deposits are refundable. Many issuers will upgrade you to an unsecured card upon request after you’ve demonstrated you can wisely manage the card.
Credit card issuers report card balances and payment history to the credit bureaus typically every 30 days. So, it’s easy to build a credit history with a credit card since those factors have big impacts on FICO credit scores. Each month you make an on-time credit card payment and don’t carry a balance on your secured card, your credit score should rise.
Become an Authorized User on Someone Else’s Card
While you might not be approved for a regular credit card, you could become an authorized user on someone else’s account, like your parent’s or spouse’s account.
Authorized users have a credit card and can use it just like the primary account holder, but they have no legal responsibility for the account. The credit history of the account shows up on the authorized user’s credit report so long as the card issuer reports authorized user data to a credit bureau, which can give you a credit score boost.
If you go this route, the account needs to be in good standing, with a low balance and a history of on-time payments. If not, being an authorized user won’t help you build a good credit score.
Becoming an authorized user is a way to jump-start credit score growth and is not a long-term fix. Real credit score growth will come from building your credit history, not piggybacking on someone else’s. Think of this option as a stepping-stone to get you to your next credit tool, whether that’s your credit card or a small personal loan.
Get a Credit-Builder Loan
When you get a credit-builder loan, the lender will deposit the amount you are approved for into a savings account. Then you repay that loan over time, plus interest.
Unlike a traditional loan, you don’t walk away from the bank with money right away. Instead, once you’ve paid the credit-builder loan in full, the lender will give you the money with any interest earned from the savings account.
This process establishes payment history data for your report, as long as the lender reports those details to the credit bureaus. Before getting a credit builder loan, verify the lender will report your payments to a credit bureau.
See If Non-Credit Bill Payments Count Toward Your Credit History
You are probably already making rent and utility payments. If you do so on time, that good payment history may help you build up a credit report.
Not all landlords report rent payments to a credit bureau, but check to see if yours does through an outside service. If not, there are rent credit reporting services, such as RentTrack and PayYourRent, that will process your rent payment and report it to the credit bureaus (for a fee, if your landlord is not signed up).
Rent payments may not be factored into your credit score depending on the credit bureau, but proof of good payment history on your credit report can help you access lines of credit that will.
You can also opt in to a new tool offered by credit bureau Experian that includes utility accounts, such as your cellphone and electric bills, on your credit report and factors them into your score. Note that this won’t affect your credit files with Equifax and TransUnion, the other two major credit bureaus. So, if a lender doesn’t use Experian for reports and credit scores, the lender won’t see the boost.
Knowing how to get a credit score of 700 or 800 and taking the steps to do it can give you access to better credit cards and allow you to borrow money with lower interest rates and better loan terms. It may take some time, but the benefits may be well worth the wait. The first step to increasing your credit score is knowing where you stand. To get started, check your credit score with the Rocket Homes® credit tool.
How Long Does It Take for Your Credit Score to Recover After Taking a Hit?
In order to understand how long it might take you personally to improve your credit, it can be helpful to look at one FICO study of the average amount of time it takes to recover your credit score back to its original number after a negative mark on your credit report.
This study was only done for mortgage payments, but it’s likely that it’d be similar for other types of negative marks, such as paying your student loans late or having a car repossessed if you don’t pay your auto loan.
|Starting credit score of 680||Starting credit score of 720||Starting credit score of 780|
|30-day late payment||9 months||2.5 years||3 years|
|90-day late payment||9 months||3 years||7 years|
|Short sale, deed-in-lieu of foreclosure, or foreclosure||3 years||7 years||7 years|
|Bankruptcy||5 years||7-10 years||7-10 years|
In general, the longer you forgo a payment you owe, the longer it’ll take to recover. And the higher your credit score was to begin, the longer it will take to recover. Know that there are things you can do to prevent this from happening and to build credit in the meantime.
What credit score do you start with?
You don't start with any credit score, and you won't get a score until you open a credit account that reports to the credit bureaus. Once you open an account, you will receive a score based on that account. It probably won't be the best score since you don't have a long enough credit history, but it won't be the worst score, either.
The truth about raising your credit scores fast
While a lucky few may be in a situation where they can raise their credit scores quickly, the bottom line for most of us is that building credit takes time and discipline, especially if you’re trying to rebuild bad credit. That’s because your credit scores are complex and made up of several interconnected factors (more on that below).
So trust us: While some credit repair agencies may promise to raise your credit scores fast, there’s no secret that will help boost your credit scores quickly.
But if you start developing healthy habits now, you can build credit over time all by yourself.
5 factors that affect your credit scores
As we mentioned above, there are several factors that go into determining your credit scores.
- Payment history makes up the biggest chunk of your credit scores. That’s why it’s so important to make on-time payments each month if at all possible. Late payments can haunt your credit history for up to seven years.
- Credit usage, or credit utilization, is another important factor. This measures how much of your available credit you tap into at any given time. Experts recommend you keep this to less than 30%.
- The length of your credit history has some impact on your credit, though not much. This factors in the ages of your oldest and newest credit card accounts, as well as the average age of all your accounts. The older your credit, the better, because it shows lenders you have more experience managing credit.
- Your credit mix has a small impact on your credit. This looks at the types of credit you borrow. Lenders want to see that you can balance revolving accounts like credit cards with installment accounts like mortgages, student loans, auto loans and personal loans.
- Your recent credit also has a small impact on your credit. This tracks the applications you file for things like new credit cards and personal loans with hard inquiries. The fewer, the better.
Monitor Your Credit for Free With CreditWise From Capital One
Staying on top of your credit is an important part of improving your score.
CreditWise from Capital One is a free tool that allows you to monitor your VantageScore® 3.0 credit score. You can access CreditWise from your desktop or from your phone, so you have it at your fingertips. Using CreditWise won’t hurt your score. And it’s free for everyone, not just Capital One customers.
It takes time to improve your credit, whether you’re starting from scratch or rebuilding after a financial setback. But the good news is that it’s possible. And once you build up your credit score, staying on top of monthly payments and other financial details can help you keep it there.