Repairing Your Credit Score Can Take 30 Days or 10 Years. Heres How to Get Started Now

Your credit score is like a financial report card that tells lenders how reliable you are when it comes to paying your bills. If you’ve made a lot of mistakes, like failing to make on-time payments or racking up debt, your score will reflect that. But the flip side is also true — responsible payment behavior will cause your credit score to rise again.

The time it will take to get a good credit score will depend on where you’re starting from, what kind of negative information exists on your credit report, and how quickly you’re able to pay off debt. While you can’t repair your credit overnight, you’ll see your score rise over time if you work to pay off debt and make your payments on-time.

Here’s what you need to know about how long it’ll take to repair your credit, and the steps you can take to start right now.

What Is a Bad Credit Score and Why Does It Matter?

There are hundreds of credit scores out there, but the two most common credit scoring models are created by FICO and VantageScore. FICO considers a credit score between 300 and 579 to be “poor,” while VantageScore considers a “poor” credit score to be between 500 and 600, according to the credit bureau Experian. Under the VantageScore model, a credit score between 300 and 499 is considered to be “very poor,” while FICO doesn’t have a separate “very poor” category. Keep in mind that your score may also vary with each of the three consumer credit bureaus — Equifax, TransUnion, and Experian — who all collect and report information independently of each other.

Having a bad credit score can affect your life in many ways. “Any time you’re applying for a mortgage, a car loan, any lease, it’s going to affect your payment. You’re going to end up paying a higher interest rate,” says Jessica Weaver, CFP, CDFA, CFS, and author of “Confessions of a Money Queen.” Bad credit can even affect employment and housing, Weaver adds. Some employers check your credit score during the hiring process, and landlords use your credit score to determine if you’re eligible to rent.

You might be denied a loan or a credit card altogether if you have bad credit, says Nathan Grant, senior credit industry analyst at Credit Card Insider. Even if you are approved, “you’re going to get worse terms for financing that you can get and lower credit limits,” he adds. Bad credit can also affect your insurance rates.

Overall, bad credit can make your life more expensive, says Weaver. Folks on a strained budget need to be especially careful about maintaining good credit to avoid unaffordable financing options.

What Leads to Bad Credit?

Your credit score is a reflection of your credit history, and any derogatory marks on your credit report can lower your score. These include:

  • Late or missed payments: Your payment history is the most significant factor in determining your score, and delinquencies stay on your credit report for seven years.
  • Charged-off accounts: This occurs when a credit card issuer closes your account for non-payment and you still owe the balance. It’s one of the worst derogatory marks you can get.
  • Accounts in collections: If you fail to make payments and your lender or issuer sells your debt to a third-party collector, this account status will show up on your credit report and cause your score to drop.
  • Loan default: If you fail to pay back a loan, it will hurt your credit significantly.
  • Bankruptcy: Bankruptcies take the longest to recover from. Chapter 13 bankruptcy stays on your credit report for 7 years, while chapter 7 bankruptcy remains for up to 10 years.
  • Home foreclosure: If you fall behind on your mortgage payments, your lender could foreclose on your home, which will hurt your credit even further.
  • High balances or maxed out cards: Having a high credit utilization ratio, or using a large percentage of your available credit, will have a negative impact on your score. Try to keep your credit utilization ratio under 30%, if possible.
  • Closing credit cards: Closing old cards will reduce the age of your credit history, and closing a card with a high limit will increase your credit utilization ratio. Both could negatively affect your score. You should only consider canceling a credit card if it has an annual fee and you’re no longer using it.
  • Applying for too many cards or loans in a short period: Applying for new credit causes a small, temporary dip in your credit. Getting a new card every couple of years won’t be a problem, but if you’re applying for one card after another, it’s going to hurt your score.

How Often Does Your Credit Score Update?

Your credit score is based on the information in your credit report. Whenever something changes on your credit report, that’s when your credit score is usually recalculated, says Grant.

Your credit card company will usually update the credit bureaus once a month with your account details, corresponding with each new credit card statement, he adds. So, if you’re working on improving your credit, it’s a good idea to check your score on a monthly basis.

How Long Does It Take to Repair or Rebuild Your Credit?

“It’s often possible to earn a higher credit score in 30 days or less,” says Grant, but don’t expect your credit score to move from fair to excellent during that time. If you’ve had a major setback, it usually takes about one to two years to repair your credit, according to Weaver.

But that depends on your individual situation. For example, FICO research shows that it takes about five to ten years to recover from bankruptcy, depending on your credit score. If you’re 30 days late on a mortgage payment, you can repair your credit in about 9 months to three years. The higher your score was initially, the longer it will take to fully recover from the setback.

You should start the credit repair process as soon as you can so you’ll be prepared the next time you need to apply for new credit. “If you’re coming up to a house purchase, a new car, starting a business, six months to a year out, start reviewing your score and your report,” says Weaver.

Fastest Ways to Improve Your Credit Score

Although repairing your credit score takes time, there are some steps you can take to speed up the process:

  • Resolve errors on your report: If you notice errors on your credit report, like incorrect balances or accounts that aren’t yours, then disputing these errors and having them removed from your credit report could quickly improve your credit score.
  • Ask for a credit limit increase: Depending on your issuer, you may be able to request a credit limit increase online. You can also call customer service. If you’ve made on-time payments but use a lot of your available credit line every month, this could be a way to lower your credit utilization ratio and improve your score.
  • Pay off debt: Paying off debt is another effective way to improve your credit score. “Right away, just prioritize paying the most you can afford in your budget while avoiding any late payments,” says Grant. A popular strategy is the debt avalanche method, which involves tackling your highest-interest credit cards first.
  • Make on-time payments: The longer you can maintain consistent, on-time payments, the more you’ll see an improvement in your score. If you tend to be forgetful, set up automatic payments — just make sure you keep a budget and have enough in your bank account to cover the charges, so you’re not hit with overdraft or returned payment fees.
  • Change your spending habits: If you find yourself in a cycle of debt and you’re not impacting your balances, you should take a step back and look at your finances and spending as a whole, Weaver says. “Stop adding to that credit card while you’re paying it off,” she says. Use a cash-based budgeting system while you’re getting control of your finances. Once your debts are paid, you can focus on using your credit cards responsibly so you don’t get into a pickle again.

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