How Long It Really Takes to Improve Credit — A Time Vs. Points Comparison
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- By Nicholas Pell
- March 12, 2012
Everyone wants a better credit score. Still, when your credit is bad, you want better credit yesterday. So in addition to knowing how to improve your credit score, you’re going to want to know how long it’s going to take for you to see noticeable improvements.
How to Improve Credit
Improving your credit score isn’t rocket science, but it also isn’t necessarily easy. There are time-tested, common sense ways to get your credit score moving in the right direction — most of these are things that you should be doing anyway. However, paying careful attention to ticking all the boxes will get the wheels moving with regard to your credit score.
- Pay all your bills on time. Delinquent accounts have a massive negative impact on your credit score. Paying bills on time ensures that you aren’t seeing the bottom drop out on your credit score.
- Pay down debt. Another big factor in your credit score is your debt-to-income ratio. It’s never good for your credit to have more debt than you need, so make a concerted effort to pay off old debts and avoid new ones.
- Don’t close old credit cards. Instead, keep a revolving balance that you pay off every month. The longer your credit history, the more creditworthy you are considered to be.
- Keep the balance on your credit cards down. You should stay at least 30 percent below your limit. Anything higher can have a negative impact on your score.
- Regularly review your credit report — at least once per year. This will ensure that you can clear up discrepancies on your credit history that might be lowering your score.
- Get some kind of installment loan. Showing creditors that you can make regular payments on debt will help improve your credit score. These include personal bank loans, mortgages, car notes and student loan payments.
How Long Does It Take to Improve Credit?
Now for the part you’re really curious about: How long is it going to take to improve your credit score? Unfortunately, the answer is “it depends.”
Even credit experts looking at your individual credit report wouldn’t be able to give you much in the way of specific answers. If you find incorrect information on your credit report, you will see changes beginning soon after you resolve the issue, which usually happens within 30 days. If you’re only behind on payments a month or two, just getting back on track can restore your credit as quickly as you damaged it.
Just making regular payments can take between 12 and 18 months to improve your credit score by 100 points. In the case of delinquent accounts, it can take up to seven years to erase the damage done to your credit score.
For bankruptcies, the number is ten. Still, you can improve your credit score other ways while these are hanging over your financial head.
Good Credit Is Worth the Wait
It’s a no-brainer that improving your credit score is worth it. Even minor changes in your credit report can have a big impact on your finances.
For example, you could have a lower interest rate on your car or home loan based on a mere 50 point difference on your credit score. This will make a large difference in the cost of your biggest purchases over time. The same is true of credit card interest rates. Don’t forget that 100 points can make the difference between the home of your dreams and renting for another year.