How Long Does It Take to Rebuild Credit?

If your credit score takes a hit, you can still recover. People see their credit scores go from good to bad and manage to repair them with patience and discipline. While anyone can rebuild credit with a good plan, some people need their credit scores repaired faster than others. Consumers planning to buy homes and cars want higher credit scores because those scores result in lower interest rates. Knowing how long it takes to rebuild credit can influence when you apply for important loans. This guide will cover the timeline and how to repair your credit scores.

How Long Does it Take to Repair Your Credit?

The amount of time it takes to repair your credit score depends on where you are starting. It’s easier to repair a 500 credit score than a 400 credit score. The events that lower your credit score also impact your recovery. While you can recover from getting a new credit card within three months, it can take several years to rebuild credit after bankruptcy. These are some of the key events that impact credit scores and how long the recovery takes.

7 Steps to Repair Your Credit Fast

No matter where your credit score is and why you want to raise your score, the strategies for rebuilding credit remain the same. You can follow these seven steps to strengthen your credit score so you can get better loan terms and other perks.

1. Automate Payments to Improve Payment History

Payment history is a driving force for your FICO score, which makes up 35% of your total score. Making on-time payments will improve your score and help with recovery, but some people forget to pay their bills. While picking up a side hustle can help if you are short on cash, some people have enough money but forget about their expenses.

Automating payments for your bills can strengthen your payment history and enforce good money habits. Knowing your money is going straight to bills will make you think twice about discretionary spending. Most of the credit-building process boils down to your ability to keep up with financial obligations.

2. Get a Secured Credit Card

Credit cards have their pros and cons. One of the main disadvantages of these cards is that you can get deep into debt with them. Some people damage their credit scores by racking up credit card debt and falling behind on payments. The thought of entering the credit card debt cycle may make credit cards sound intimidating, but there is a useful solution.

Secured credit cards are a different type of credit card that avoid many of the pitfalls of traditional, unsecured credit cards. You can only get a secured credit card if you make a security deposit. This deposit becomes your credit limit, which makes it easier to stay on top of your expenses. 

Consumers striving to rebuild credit should look into these cards. Secured credit cards are easier to obtain and sometimes have no credit requirements. The payments you make on these cards will get reported to the major credit bureaus and give you the opportunity to improve your score.

3. Report Utility and Rent Payments

Your credit score goes up as you demonstrate the ability to cover your expenses. Making rent and utility payments highlights your consistency in making payments, but not all of these payments get reported to the credit bureaus. You should ask your landlord if they report your rent payments. It’s also a good idea to contact utility companies to see if they report your payment history. If your landlord and utility company do not report your payment history, you should report these payments yourself. Getting these payments on your credit history can add a few points to your credit score.

4. Don’t Apply for New Credit Cards

Credit cards make it easier to spend money and come with rewards programs. There are many benefits to having credit cards, but you don’t need too many of them. This is especially true when you are rebuilding credit.

Each time you apply for a credit card, a hard credit inquiry gets added to your report. Credit card issuers and lenders often use hard credit checks to get more information about your ability to repay debt. Hard credit checks will lower your credit score. While they are easy to recover from, accumulating too many hard credit inquiries can make your rebuilding efforts more difficult. Each credit card application can result in a hard credit check that hurts your credit score, even if you do not get approved.

5. Have a Family Member Add You to Their Account

You can build credit by becoming an authorized user of someone else’s credit card. The primary user’s activity will impact the credit scores of the authorized users. You can become an authorized user on a family member’s credit card to benefit from their good payment history. However, if the family member falls behind on payments and does not keep up with debt, your credit score will take a hit.

6. Constantly Check Your Reports

Monitoring your credit report can inspire you to do better and look for errors. Correcting any mistakes can improve your credit score and get you closer to the path to rebuilding your credit. Checking your credit report can also tip you off on suspicious activity. Consumers can request a free copy of their credit report each year from the three major credit bureaus. If you space out your requests, you can get a free copy of your credit report every four months.

7. Keep Your Old Accounts Open

An old credit card may not seem like much, but it can improve your credit score. The major credit bureaus like to see experience, and the length of your credit history makes up 15% of your total score. Even if you do not use a card for everyday expenses, do the minimum to keep it open. 

Rebuilding Your Credit with Realistic Aspirations

It’s realistic to rebuild credit and go from a bad score to a great one. The process is a long-term journey that requires patience and discipline. An 850 credit score is the highest number you can have, but you don’t need an 850 credit score to get the best perks. A credit score over 800 is just as effective and will help you secure lower interest rates and better loan terms.

Frequently Asked Questions