How Long Does it Take to Rebuild Your Credit?

Maintaining your credit score involves lifelong financial behaviors, but improving your score doesn’t have to take forever. It won’t happen overnight, but a few smart decisions can turn a bad score in the opposite direction. Depending on what kind of items you have on your credit report, it can take months and sometimes even years to get that number up where you want it to be.

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It is possible, however, to take strategic actions specific to your financial history, and from there estimate how long it will take to rebuild your credit. You’ll also find a few tips on things you can do today to start improving your credit score.

What affects your credit score?

Before figuring out how long it will take to improve your credit score, you need to know what actually goes into calculating your credit score. The most important factor is how timely you are with paying your bills. Once you go past 30 days due on a loan, credit card balance, utility bill, cell phone bill, or other financial responsibility, the creditor can report the late payment to each of the three credit bureaus, automatically denting your credit score.

Your credit score is also influenced by how much money you owe, specifically compared to how much credit you have available to you. If your credit cards are all maxed out, your credit score will be substantially lower than if you keep a low balance (or better yet, no balance at all!).

Next up affecting your credit score is how long you’ve had credit. Unfortunately, you get penalized if you haven’t had any credit cards or loans because lenders are unsure of how willing you are to repay what you owe. There’s no history to show your attitude towards borrowing, so your credit score is lowered to reflect the greater risk lenders may incur by lending you money.

The actual types of credit you use also affect your credit score. Installment loans are counted more favorably towards your credit score compared to revolving credit such as credit cards. This is because of a couple of different reasons. First, an installment loan typically has a fixed payment every month (unless you have a variable interest rate) so you can plan your budget based on that amount. Secondly, some types of installment loans are viewed as “good credit” because they add some type of value. Student loans reflect a higher earning potential over time, while a mortgage offers the possibility of home equity.

Finally, both new credit and inquiries cause fluctuations in your credit score. The newer your credit cards are, the lower your score will be. And it also suffers when you have multiple inquiries from loan and credit card applications because it makes lenders think you’re desperate for cash.

So how long will it take to repair your credit?

Repairing your credit can take as long as seven to 10 years, depending on what kind of derogatory items you have on your credit report. Late payments, for example, stay on for seven years, while a bankruptcy or foreclosure stays on for 10 years. But even though they’re listed on your credit report, the negative effects on your actual credit score dwindle over time.

Lenders can still see the items on your report and can use that information during the approval process, but that doesn’t necessarily mean those negative items are still having a huge impact on your score. And they certainly don’t have as much of an effect after they’ve been on there for a few years. So even if you do nothing, your credit will naturally start to repair itself over time — assuming you don’t accumulate new derogatory items along the way.

That being said, exactly how long it takes to rebuild your credit score depends not just on what items you need to repair, but also on how high your score was to begin with. Generally speaking, the higher your score was, the longer it takes to get back to its original starting point. That may seem unfair but it makes sense: your score drops more for derogatory items the higher your score begins. You’re not being punished more severely, you’re just being placed in the band that reflects your financial situation.

Once you begin mending your score, the simplest improvements will take effect more quickly. So it’s easier to jump up from a 550 to say, a 650 than to an 800. After you take care of the quick fixes, you’ll focus on more time-consuming issues that take longer to be reflected in your score. That can slow down the process of getting your score back up to the 700 or 800 range. Remember, it’s much easier to hurt your credit score than it is to fix it, so treat every financial decision you make with care!

What are some easy steps to rebuild your credit quickly?

Your first step in rebuilding your credit is to start paying your bills and loans on time to avoid hurting your score even more. Remember, your payment history is the most heavily weighted category contributing to your credit score. This also builds up a positive credit history that will help you in the long run. Next, you want to use your current credit responsibly. Be sure to keep a low or even a zero monthly balance.

If you have existing debt, work on paying it off. That way you’ll lower your amounts owed, which automatically increases your credit score. Take the time to look at your budget and generously cut back on your spending habits. You could also consider taking on a part-time job or side hustle to make some extra cash to put towards those credit card payments.

It’s worth noting here, however, that even if you pay off your card in full each month, that zero balance may not be reflected in your credit report and credit score. If your score is pulled before you make the payment, the full balance counts as part of your total debt. Stop using any revolving credit for a month or two before you apply for credit to make sure you don’t accidentally add to your total amounts owed.

When you’re trying to rebuild your credit but have negative items haunting you, you might not be able to qualify for a credit card. But responsibly using a credit card can also contribute to strengthening your score. Your timely payments will be reported to the credit bureaus regularly and the length of your credit history will age over time.

In this situation, you could consider signing up for a secured credit card. Unlike a traditional credit card, you’ll make a deposit to the creditor, equal to the amount of your line of credit. So if you make a $500 deposit, you can charge up to $500 on your secured card. However, you don’t pay off your balance with the security deposit; instead, you make separate payments each month. You receive your deposit back either when you cancel the card or upgrade to a better one.

Another quick way to increase your credit score is to get added as an authorized user on someone else’s credit card. This is especially helpful if you don’t have a long history of loans or credit cards. Not only will the account be added to your credit report for the full age of the other person’s credit card, their positive payment history will help you, too.

Just be careful to not make your own charges on the card, or pay them off immediately if you do. Also, be sure you trust the credit card user completely, because just as your credit activity affects their credit score, their actions affect yours as well. If they suddenly rack up a bunch of debt and stop making payments on the card, you’re both held equally responsible.

Can you get negative items removed to rebuild credit quickly?

In some cases, yes. Since more serious items linger on your credit report for years, it might be worth disputing some of them to improve your credit more quickly. You can do this on your own by sending a letter disputing the item to the creditor. They have 30 days to respond proving the information is accurate, whether it be an amount owed or a late payment. If you don’t hear from them within that timeframe, you might actually get it removed on the technicality that they did not respond in the required period.

If this sounds too complicated or like a lot of work, you might want to try hiring a credit repair company, especially if you have more than a few items to get rid of. A good company will have legal staff on hand to analyze your credit report and strategically pick which items to dispute. Then they’ll take care of the entire dispute process for you, using full knowledge of the law to aid their efforts. Just be sure to pick a reputable company to get the best results in the shortest period of time.