After all, good credit is more than a financial score. It’s the result of healthy habits practiced over an extended period of time.
So how long does it take to build credit?
What factors influence credit the most?
And what tips and tricks can you implement to accelerate the process?
Let’s start with a brief overview of the five factors of credit.
Credit: Explained
There are two key terms to know about the world of credit: credit reports and credit scores.
Your credit report is a compilation of your credit lines and payment history.
In other words, it’s an all-encompassing assessment of your financial life. The three major credit reporting bureaus — Experian, TransUnion, and Equifax — are responsible for compiling these official reports.
Your credit score, on the other hand, is a simplified version of your larger credit report.
It’s a three-digit number that lenders use to determine your eligibility for credit products.
FICO® scores range from 300 to 850, with scores under 580 receiving a “Poor” rating that “demonstrates to lenders that the borrower may be a risk.”
Conversely, FICO® scores over 670 are considered to be “Good,” and therefore “demonstrate to lenders that the borrower is very dependable.”
Your credit score is derived from five key factors:
Though credit scores may seem complicated, they’re ultimately bound by a simple truth:
paying bills on time and limiting credit utilization are essential to building strong credit.
So… How Long Does it Take?
The honest answer is, it depends.
As seen above, there are numerous variables at play like your current score, your outstanding debt balance, and your payment history.
And while it takes months (and even years) of healthy habits to build credit, it only takes a few missteps to harm it.
According to FICO®, it can take up to three years for your score to fully recover from one 30-day late payment. For 90-day late payments, it can take even longer.
Events like bankruptcies and collection payments can stay on your credit report for up to ten years.
But here’s the good news: even in the event of bankruptcy, you can still begin rebuilding your credit in twelve months.
You simply need the right habits — repeatable habits — to get back on track.
Note: New to credit? Don’t worry.
Once you open an account — whether through a credit card or a personal loan — try to make payments on time and wait a few months. According to Experian, it will only take three to six months before your credit score will be calculated.
4 Ways to Improve Your Credit
If you’re reading this, then chances are you want to do more than wait.
You understand that building credit takes time, but you also want to get actively engaged with the process.
To help you get started — whether you’re new to credit or want to raise your score — consider implementing these four quick tips:
Building credit takes time, and building good credit takes even longer.
Rather than rush to the finish line, keep your eye on the horizon, stick to your plan, and enjoy the ride to stronger credit.
You’ll reach the promised land before you know it.
Flyp Forward
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That’s why we built our game-changing debit card: to provide amazing benefits that reward you for your work and enrich you for your discipline.
We built you a robust Knowledge Center to learn other ways you take command of your financial life.
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Flyp is not a bank. Banking services are provided by Sutton Bank, member FDIC. The Flyp Classic Debit Card is issued by Sutton Bank, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa, U.S.A. Inc. All other trademarks and service marks belong to their respective owners. Read the Flyp Rewards Official Terms before participating. No account opening or payment is necessary to enter or win. See Terms for ways to enter.
All information provided by Flyp is believed to be accurate at the time of publishing.
Sources
VanSomeren, Lindsay. “How Long Do Late Payments Stay On Your Credit Reports?” Forbes. Forbes, July 22, 2021. https://www.forbes.com/advisor/credit-score/late-payments-on-credit-report/#:~:text=According%20to%20FICO,%20depending%20on,nine%20months%20and%20seven%20years.
Equifax. “How Long Does Information Stay on My Equifax Credit Report?” Equifax. https://www.equifax.com/personal/education/credit/report/how-long-does-information-stay-on-credit-report/#:~:text=Generally%20speaking,%20negative%20information%20such,reports%20for%20approximately%20seven%20years.
Treece, Kiah. “7 Easy Ways To Rebuild Your Credit After Bankruptcy.” Forbes. Forbes, July 16, 2021. https://www.forbes.com/advisor/credit-score/rebuilding-credit-after-bankruptcy/
Sandberg, Erica. “A Beginner’s Guide to Building Credit.” Experian. Experian, September 25, 2019. https://www.experian.com/blogs/ask-experian/how-long-does-it-take-to-build-credit/
Fox, Michelle. “A third of Americans found errors on their credit reports. Here’s how to fix those mistakes.” CNBC. CNBC, June 11, 2021. https://www.cnbc.com/2021/06/11/how-to-fix-those-mistakes-on-your-credit-report.html#:~:text=It%27s%20not%20as%20uncommon%20as,1%20and%20April%201.
Experian. “What is a credit utilization rate?” Experian. https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/
Flyp is not a bank. Banking services are provided by Sutton Bank, Member FDIC. The Flyp Debit Card is issued by Sutton Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.
Visa is a registered trademark of Visa, U.S.A. Inc. All other trademarks and service marks belong to their respective owners.