This a discussion I’ve been seeing a little bit lately, and because it’s been a bit since I talked about it, I figured it was time to bring it up again – credit scores. Like, do I really need one? My credit is awful, should I close that card after I pay it off? And my favorite: how long does it actually take to improve your credit score?
The reason I like the question about improving your credit score the most is because it shows initiative, responsibility, and the realization that yes, having a decent credit score is an important part of being an adult.
I also like that question because I have a very real experience with how long it takes to improve your score.
It was two years after I graduated from college, and my credit score was bananas for the average 24 years old – 800! Then there was a mixup with one of my student loan payments that resulted in me missing a payment by complete accident.
I dropped from an 800 to a 564 in three months.
I knew what that meant and I felt really shitty about it, like full of embarrassment.
I spent the next several months working on it, and less than a year later, I had it back up to a 700. Not in the excellent range I was in, but much better than a 564.
I learned a lot during those few months, and as I’ve gotten even older, had more life experiences, I understand, even more, than 24-year-old Bobby did, how freaking important having a good credit score really is.
Before I get into the article much more, I want to give you one disclaimer – it’s easier to wreck your credit score than it is to improve it.
You probably realized that from my experience, but I want to make that clear for anyone who searched “how long does it take to improve your credit score” and wound up here hoping I’d have some secret unicorn piece of advice that improves it in days not months. Well, I’m sorry.
As a peace offering, I’ll tell you what you can expect from this article:
- Information on how long it takes to recover from certain credit dings, including a nice table.
- Excellent advice on how to improve your credit score.
We can start with what you came for.
How long does it take to improve your credit score?
But first, you need to know what decides your credit score
Your credit score is comprised of five different factors and they are reported by three main credit reporting agencies: Experian, Equifax, and Transunion. These bureaus report to credit scoring agencies, FICO is the most well known, and your score may vary a little based on when they are reporting.
The five components that determine your credit score are:
- Your payment history- very important
- Your utilization rate- very important
- Credit history, or length of credit- somewhat important
- Types of credit- not as important
- Number of credit inquiries- not as important
Those “not as important” ones are still important, but they make less of an impact as the top three do especially your payment history and utilization rate.
By law, you can receive a free credit report once a year from each credit reporting agency, but you can also get free access to these with most budgeting software, like Mint, and most of your credit card companies will give you access to this as well.
You really don’t need to pay for your report.
The type of credit issue you have will determine how long it takes to improve your credit score
Knowing how long it takes to improve your credit score can help you if you are thinking about buying a house, taking out any other type of loan, trying to rent a place, and getting low rates on insurance. This may sound ridiculous, but even employers will look at your credit score before hiring you.
Because of the factors, I listed above, and how they are weighted, that means the time it takes to improve your credit score will depend on your issue.
How to improve your credit score
Even if you searched “how long does it take to improve your credit score,” what you actually need is actionable tips on how to improve your score.
Even though it will take a while, even for minor things, there are steps you can take to improve your credit.
1. Before you do anything else, make sure your credit report is accurate
If you are pulling your credit report for free, like you should be doing, then you can see what’s causing a low score. And just to clear this up, checking your score will not hurt your credit. That’s known as a soft inquiry and it’s nbd.
When you are looking for discrepancies, see how many accounts you have open, number of late payments, and other derogatory marks. If those don’t match up with your records, call the credit bureaus and file a dispute.
This might be a little bit of a headache, but it’s worth it in the long run.
Under the Fair Credit Reporting Act, you have to dispute credit reporting errors in writing, but you might be able to call to have that mark removed. It doesn’t hurt to ask. Fixing the error will take 30-45 days, but once it’s fixed, it will immediately be factored into your score.
To read about my experience improving my score from a 564-700, and how I handled the dispute, read more at How to Fix Your Credit Score Quickly.
2. Know your issues
Checking your credit report is going to tell you where your issues are if you don’t already know. I mean, if you’ve missed a bunch of payments, you probably know that.
Get to know your problems and own them. Maybe you don’t want to make a t-shirt that says “I missed a bunch of payments,” but do use that knowledge to fuel your journey to achieving a good credit score.
The next steps I’m going to cover are how to handle some of the most common credit score dings, but really anyone can benefit from these tips to grow their score.
3. Fix your late payments issues
When you get a line of credit, it would be really nice if the due date on that new account lined up with the rest of your payments, but it probably won’t. Bummer, right? While that would make your life exponentially easier, there are some things you can do to always stay on top of your payments, even if you can’t make the payment in full.
Setting up autopay on your credit cards is an easy way to stop making late payments. If you can’t do autopay for some reason, use the technology you have (reminders on your phone, notifications from your budgeting software, etc.) to keep you on top of due dates.
If you aren’t known for missing payments and literally forgot about one, you can call your credit card company to forgive a late payment. They won’t always do it, but again, it never hurts to ask.
4. Age your credit
This is one of the most difficult things for young people to deal with because we enter the world with zero credit, which can make it hard to build good credit. It can take a few years to build a good credit score because of how important the age of your credit is to the reporting bureaus.
This is why keeping your accounts open, even if you’re trying to eliminate your credit card debt, is usually going to benefit you, especially the accounts you’ve had opened for the longest amount of time.
I was talking to a reader the other day about credit consolidation (which will really hurt your score while you’re in the process), and they said one of the biggest factors in now having a good credit score was that they were still able to keep their oldest cards open.
Another thing I’ve seen from some websites is to ask a friend or family member with a good credit history to add you on as an authorized user to one of their accounts. I’m not sure I feel great about this because it could totally wreck your relationship if things don’t go as planned.
You would both have to feel really good about that before going in, and yeah… just be careful.
5. Fix your utilization rate
If this is your credit score issue, than there are a couple of routes you can take to improving your score. The biggest is paying down your debts – that’s always going to be a good idea.
Paying down your debt will lower your utilization rate.
Generally speaking, you want to have a credit utilization rate of 30% or lower. I say generally, though, because your utilization rate will also be determined by the type of credit you have. So, don’t expect to get to 29% and see a big bump in your score.
Beyond paying down your debt, you can call your current credit card company to see if they can raise your line of credit. Don’t use that extra credit – just let it sit there and improve your score.
6. If you have something in collections, get rid of it
If you’ve been delinquent on a bill for a certain length of time, it can go to collections. This is a big credit score boo-hoo. But, having a bill go to collections doesn’t always mean you pay the collections agency.
If this happens to you, you will first need to know who owns the debt. Did the collection agency buy the debt? If so, can the debt be bought back so you can pay the original owner of that debt?
These are the questions you need to ask before making a payment on a debt in collections. Who you pay will determine how your payment is reported.
7. Don’t close any accounts, well… this depends
There is a lot of debate on closing credit card accounts and how they do or don’t help improve your credit score. Closing a credit card can negatively impact your score, but it might also be a good thing.
If you are really bad with credit cards – maxing them out, missing payments, etc. – then you might have a negative relationship with credit cards. If that’s the case, you might want to think about closing some of them.
I say you might want to think about it.
If you are able to get your credit card issues under control, then having those cards open once they are paid off will actually help you for two reasons: improving your credit utilization rate and aging your credit.
Closing credit card accounts is a multi-faceted thing, and you’ll need to know the dos and don’ts of closing a credit card before closing an account.
8. Avoid any hard inquiries
Remember how I said that checking your credit score was a soft inquiry and didn’t hurt your credit, well there are inquiries that will hurt your score. Those dings are known as hard inquiries, or hard pulls.
You will typically have to authorize a hard inquiry, and they happen when you apply for a mortgage or other types of loans, or a new credit card. They have a pretty negligible effect, but if you’re on the line, there are certain times that you might want to avoid a hard pull.
Here’s a good example of this:
If you are about to refinance your house for a lower interest rate and you have a score of 740, which is considered very good, applying for a new credit card up to three months beforehand can impact your ability to get the best interest rate.
You might be applying for that credit card to take advantage of a good rewards offer for travel hacking, but a lower interest rate on a mortgage will obviously be more impactful on your financial life than a few hundred travel points.
9. Once you have improved your score, keep monitoring your credit
It is way too easy to check your credit score to not do it. It’s free, it’s easy, and will prevent fraud on your accounts.
Beyond using the reports supplied by your financial tracking software and your credit cards, you can recieve free credit reports from annualcreditreport.com, which is what the FTC recommends.