A high credit score means you’re a low-risk borrower, which can make lenders approve your loan faster with a lower interest rate. A low credit score could lead to higher interest rates and you won’t be approved for a loan or credit card.
But how long does it take to improve a credit score? There’s no definite answer to this question because everyone’s financial situation is unique and complex.
Depending on where you’re starting from and how you manage your finances, it could take anywhere from one month to ten years.
Here are some factors that may influence the length of time it would take you to improve your credit score.
Your Current Credit Score
The first thing you need to know is where you currently stand. If you have a low credit score, it’s going to take longer to improve your score than if you have a high credit score.
This is because there’s more room for improvement when your score is lower. But the good news is that you can still get a bad credit loan with your low score.
Any Negative Information on Your Report
If you have negative information on your credit reports, such as late payments, collections, or charge-offs, this can also impact how long it takes to improve your score.
The type of negative information will also play a role. For example, late payments generally have a bigger impact than inquiries.
Length of Time You’ve Had Credit
The length of your credit history is also a factor in your credit score. So, if you’re just starting out and don’t have a long history, it will take some time to build up your score.
On the other hand, if you’ve been using credit for many years, you’ll likely have an easier time increasing your score.
Ways to Improve Your Credit Score
If you have a bad credit score, it may seem like there’s nothing you can do to improve it. However, there are a few things you can do to start increasing your score. These include:
Make Credit Card Payments on Time
One of the most important things you can do to improve your credit score is to make sure you always make your credit card payments on time. This shows creditors that you’re reliable and that you’re working to improve your credit history.
Use a Secured Credit Card
A secured card requires you to put down a deposit that acts as your credit limit. Using a secured credit card can help you build up your credit history and improve your score over time.
Keep Your Credit Card Balances Low
Your credit utilization ratio, which is the amount of debt you have compared to your credit limit, makes up 30% of your credit score. So, it’s important to keep your balances low in order to keep your score high.
Check Your Report and Report any Errors
You should also check your credit report regularly to make sure that all the information is accurate.
You can get a free copy of your credit report from each of the three major credit bureaus every year. If you see any errors on your report, you should dispute them with the credit bureau.
Minimize Credit Inquiries
Every time you apply for a new credit card or loan, the lender will do a hard inquiry on your credit report. This can temporarily lower your credit score by a few points. So, it’s best to minimize the number of inquiries you have on your report.