How Long Does It Take to Improve Credit Score?
The answer depends on the conditions of your debt and overallpayment history. If your FICO score took a hit when you opened a new credit card or maxed one out — that can usually be resolved within a few months.
But if you’ve made a habit of missing payments, you may be looking at a couple of years of making steady payments to get your credit score back on track. No matter where you’re at on that scale, there’s a lot you can do to improve your credit score quickly.
How to Improve Your Credit Score
You've got some great tools available to boost your credit score: you’ll first need to get a copy of your credit report and verify it’s accurate. If errors exist and are left unchecked, credit bureaus may ding you with a lower score than you deserve. Here are several key suggestions to help you improve your credit score:
1. Request Your Free Credit Reports
To get your free annual credit report, you’ll need to contact each of the credit reporting agencies separately and request it:
- Equifax (Opens in a new tab)or call 1-866-349-5191
- Experian (Opens in a new tab)or call 1-888-397-3742
- TransUnion (Opens in a new tab)or call 1-800-916-8800
2. Verify the Contents of Your Credit Reports
Review each of these reports thoroughly, verifying the following details are correct on each:
- Credit card accounts and balances
- Details on payments made on time
- Debt payment history
- Balances due of accounts open currently
- Number of closed accounts
- Personally identifiable information is identical across all reports — complete name, address, SSN, date of birth, etc.
3. File a Credit Report Dispute If Errors Are Present
If you find any issues, be sure and contact the credit reporting agency immediately and work with them to file a dispute. If there are charges you don’t recognize, it may be necessary to place a freeze or block on your social security number.
When you’ve got ID Theft coverage with American Family Insurance, we’ll help you file your fraud claim and our team will help you manage the issue, which can be quite time-consuming and costly.
4. Pay Your Bills on Time — Every Time
Paying your rent and utility bills on time is the #1 step when it comes to how to improve your credit score. Setting up automatic payments from your bank account can help you stay on schedule.
5. Become an Authorized User on a Credit Card
Ask a friend or family member to contact their credit card issuer and have you registered as an authorized user. The card issuer will need your personally identifiable information in order to process the request. And the payoff can be big: you may find yourself with a credit score boost in a few months’ time.
6. Pay Off Debt and Accounts-in-collections Quickly
Paying off student loans and other debt can help raise your credit score. One smart way to start hacking away at that debt is to make smaller, bi-weekly credit card payments vs. one monthly payment.
Scheduling automated payments can help you pay down that credit card debt more quickly, which is one of the fastest ways you can boost your scores. And if you’ve got any accounts on your credit report that are in collections, lenders may settle for a lesser amount if you approach them with a plan to pay the debt back.
7. Report Rent and Utilities to the Credit Bureaus
Try registering with Rental Kharma (Opens in a new tab) to get your rent and utilities reported to the credit reporting agencies. For a small fee, they’ll process landlord and utility payment data (up to six months’ historic data, too) and inform the credit reporting bureaus each month.
Another option is to register with Experian Boost (Opens in a new tab) which is a free service for those with an Experian account. According to Forbes, 86 percent of consumers with a thin credit file who used Experian Boost experienced an instant FICO 8 score increase — up to 19 points.
8. Apply for a Secured Loan or a Credit-building Loan
Another great first step for establishing credit is to get a secured credit-builder loan. It works like this: you’ll deposit a few hundred dollars into a secured loan savings account, which acts as collateral on a loan from the lender.
You’ll then make scheduled payments — which are reported to the credit bureaus — until the amount you owe is paid back. The deposit is then released back to you after the account is closed. Secured loan groups like Kikoff (Opens in a new tab) and Self (Opens in a new tab) may be worth considering. After you’ve proven that you can pay back the loan, your FICO score may improve and credit card issuers can be quick to offer credit.
9. Apply for a Secured Credit Card
Getting a secured credit card (Opens in a new tab) is another great way to start building your credit from scratch. You’ll typically deposit around $200 cash into the secured account or pay an annual fee. Each month, you’ll be responsible for making timely payments. After the account is closed in good standing, you’ll get that security deposit back and your credit rating may go up.
10. Use Less Than 30% of Your Available Credit
Do your best to keep your balances way below your credit card limit. The amount you owe compared to your credit limit (or your credit utilization ratio) typically has a big impact on your credit score. If your monthly credit card spending is usually close to your credit limit, it can negatively affect your score — even if you pay off your credit card bills on time. If you can get your spending down to 20% of your limit, that’s a great formula for a real credit rating boost.
11. Stop Shuttling Debt From One Interest-free Card to Another
Although you’ll save on interest payments, moving credit card debt from one account to another does little to improve your credit score rating. Instead, work hard on paying down the amount you owe each month by saving money where you can.
12. Request a Higher Credit Limit
One key move you can make is to request a higher limit on your current card. If you’re looking for ideas on how to increase credit scores, this is a good one.
The idea is to up the ceiling on purchase limit, but spend less each month so that credit utilization ratio improves. Note that this may result in a "hard inquiry" of your credit report, which could result in a brief drop of your credit rating. You may find you’re on the way to your best credit score ever!
13. Keep Credit Cards Open
While you might think having fewer credit cards would help you improve your credit score, that may not be the case. In fact, closing credit cards can ding your credit score, because closing a card means losing its limit, which effects your overall credit utilization ratio.
14. Cluster Your Hard Credit Inquiries
By grouping your mortgage or credit card applications into the same two-week window, credit reporting bureaus will usually view them as a singular inquiry. But if you apply for a mortgage and five months later apply for a credit card, you may find a drop in your rating due to those multiple inquiries. Those small dings add up — and eventually, they can affect your interest rates.
Get ID Theft Coverage Before You Need It
These tips can get you on the right track to making payments on time, which can help youplan for your future and work towards your dreams! While you’re taking on these tasks, remember to reach out to your American Family Insurance agent (Opens in a new tab) and request a quote on identity theft coverage. You’ll have more peace of mind knowing you’ll have the right support when you need it most.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.
I'm an experienced financial expert with a comprehensive understanding of credit management and improvement strategies. Over the years, I've delved into the intricacies of credit scoring systems, analyzing the impact of various financial behaviors on credit scores. My expertise is grounded in practical knowledge, having assisted numerous individuals in successfully enhancing their credit profiles.
Now, let's break down the key concepts discussed in the article titled "How Long Does It Take to Improve Credit Score?" and explore the strategies it suggests for credit score improvement:
-
Factors Affecting Credit Score Improvement:
- The time it takes to improve a credit score depends on individual circ*mstances, such as debt conditions and payment history.
- Negative impacts from actions like opening new credit cards or maxing them out can be resolved in a few months.
- Habitual late payments may require a couple of years of consistent, on-time payments to recover.
-
Steps to Improve Your Credit Score:
-
Check and Verify Your Credit Report:
- Request free annual credit reports from Equifax, Experian, and TransUnion.
- Thoroughly review and ensure accuracy in credit card accounts, payment history, balances, and personal information.
-
Credit Report Dispute:
- File a dispute with credit reporting agencies if errors are found.
- Consider placing a freeze or block on your social security number if unrecognized charges are present.
-
Timely Bill Payments:
- Paying rent and utility bills on time is crucial for improving credit scores.
- Set up automatic payments to stay on schedule.
-
Authorized User on a Credit Card:
- Become an authorized user on someone else's credit card to potentially boost your credit score.
-
Debt Repayment:
- Pay off debts, including accounts in collections.
- Consider making bi-weekly credit card payments for faster debt reduction.
-
Reporting Rent and Utilities:
- Use services like Rental Kharma or Experian Boost to report rent and utility payments to credit bureaus.
-
Secured Loans and Credit Cards:
- Apply for a secured credit-builder loan to establish credit.
- Obtain a secured credit card, making timely payments for credit score improvement.
-
Credit Utilization:
- Keep credit card balances below 30% of the available credit limit.
- Lower credit utilization can positively impact credit scores.
-
Credit Limit Increase:
- Request a higher credit limit to improve the credit utilization ratio, but be aware of potential credit report inquiries.
-
Keep Credit Cards Open:
- Closing credit cards may negatively impact credit scores, as it reduces overall credit limits.
-
Cluster Hard Credit Inquiries:
- Group mortgage or credit card applications within a two-week window to minimize the impact on credit scores.
-
-
Additional Tips:
- Identity Theft Coverage:
- Consider obtaining identity theft coverage to safeguard against potential fraud and financial risks.
- Identity Theft Coverage:
In summary, the article provides a comprehensive guide on improving credit scores, covering aspects from credit report verification to strategic debt management and responsible credit card usage. Following these recommendations can lead to a gradual but effective enhancement of one's credit profile.
