How Long Does it Take to Build Credit? It Depends

Establishing good credit is easy when you know what to do — here’s how to get started.
11/1/19 | By Lisa Bigelow
Man using his credit card on his laptop

FinanceBuzz is reader-supported. We may receive compensation when you click links to products or services mentioned in this story. The opinions and recommendations are the author's own and have not been reviewed, endorsed, or approved by any of these entities. Learn more about how we make money.

Whether you have a thin credit file or have made some financial missteps in the past, there are a few steps you can take to build good credit quickly. But be careful, because the spending and repayment habits you develop now have a huge effect on your ability to borrow money later.

If you plan to apply for a mortgage or an auto loan, for example, having good credit is critical. Good credit can save you a lot of money on interest rates and help you access the most favorable loan terms. Some employers run credit checks prior to issuing job offers, and if you need to rent an apartment, you can bet your landlord will check your credit before approving your application.

Long story short, maintaining good credit is extremely important because it can affect many parts of your life. So if you’re wondering how long it takes to build credit and what you can do to build credit quickly, start here.

How long does it take to build credit?

The answer to that question varies from person to person, but according to Experian, it takes about three to six months for a credit score to be calculated if you’re new to borrowing. If you have a recent bankruptcy or several late payments, it could take longer. Here’s how it breaks down.

When you get your first credit card or loan, the lender will report your information to Experian, TransUnion, and Equifax. After that, it takes several months for the bureaus to gather enough spending and repayment data to score your profile. Establishing a pattern of regular and responsible credit card utilization habits right away helps because you’ll have fewer credit mistakes to recover from.

On the other hand, the more serious your mistakes are and the longer they go on, the longer it will take to build good credit. Bankruptcy and foreclosure, for example, stay on your credit report for seven to ten years. Late payments remain for seven years, too, but they won’t lower your score as much as bankruptcy or foreclosure will.

Other things that could hurt your credit include:

  • Failing to pay utility bills on time, as utility companies can report seriously delinquent accounts
  • Being a co-signer on a loan that is delinquent
  • Settled debts that are reported to credit agencies, repossession, and account charge-offs

That’s why it’s essential to practice disciplined spending and repayment habits from the moment you get your first credit card or loan. Start now and you can consider applying for other types of loans that require longer and stronger credit history, such as a mortgage, that much sooner.

What to do to start building credit now

1. Get a secured credit card

A simple way to jumpstart your credit journey is to apply for a secured credit card. Secured credit cards are perfect for consumers who are new to credit, because:

  • They’re easy to get. Secured credit cards require a security deposit, and your credit limit will equal the amount of your security deposit. Since you put down cash upfront, the credit card issuer takes on less risk — which is what makes the issuer more likely to approve a secured credit card application from a low-credit borrower.
  • They help build credit quickly. Even though secured credit cards require a security deposit, your issuer will still report your spending and repayment activity to the credit bureaus. Practice smart habits and you can establish a strong credit score right from the start.
  • They can help you get approved for an unsecured credit card. Once you’ve established good credit using a secured credit card, you may find it easier to get approved for an unsecured credit card. Since unsecured credit cards don’t require a security deposit, you won’t have to deliver cash to the issuer upfront.

2. Always pay at least the minimum amount owed on time

The cardinal rule of good credit is this: Always pay at least the minimum amount owed on or before the due date. Even if you can only pay the minimum balance, paying on time is the single most important thing you can do to build and maintain your credit. That’s because on-time payments account for 35% of your FICO credit score.

Set up automated minimum payments and payment reminders as soon as you get your new credit card. This way, you’re much less likely to miss a payment. However, it’s strongly advisable to spend less than you could so you can pay your statement balance in full every month. Not only will you avoid accumulating debt and interest charges when you pay in full, but you’ll also boost your credit.

3. Limit your credit usage to 30% (or less) of your available credit

Credit bureaus want to see you using your credit card regularly, but also responsibly. So even if you have a $1,000 credit limit, don’t max it out by spending $1,000 on it every month — even if you can pay it all back at once.

Credit bureaus refer to how much of your credit you use as “credit utilization,” and it counts toward 30% of your FICO credit score. To maintain healthy credit utilization, most experts recommend spending just 30% or less of your credit limit each month. If you have a $1,000 credit limit, that equates to spending $300 or less each month.

4. More ways to build your credit

Opening a secured credit card, paying on time, and not spending too much are some of the fastest ways to build your credit score, but other things could help, too:

  • Sign up for Experian Boost. This free service gathers payment data from utility and mobile phone providers that don’t typically report to credit bureaus. So if you typically pay your electric bill and similar expenses on time, this could boost your score. Experian states that consumers who enroll in Boost see, on average, a 13-point increase in their FICO credit score.
  • Read your credit reports and dispute mistakes in writing. Incorrect data about you could be dragging down your credit score. Your credit score is based on the information in your credit reports, which you can view at AnnualCreditReport.com. Review your credit history and dispute incorrect and fraudulent information with each agency, in writing, separately. This is critical to do quickly if you suspect identity theft.
  • Become an authorized user. Consider asking a parent or a sibling with good credit if you can become an authorized user on their credit card. If you’re added, the primary cardholder’s on-time payment history will also appear on your credit report — helping you build a positive record.
  • Apply for a credit builder loan. Small credit builder loans can help those with no or bad credit build it up over several months. With these special loans, you don’t receive the money upfront. Instead, you make monthly payments to your lender; when the loan term ends, you’ll get all the money you paid over your loan term back. And assuming you didn’t make late payments (or miss any) on this loan or any other, you should have a better credit score, too.

3 things to avoid when building credit

You already know that missing payments and running a high balance every month can hurt your credit score, but there are more behaviors to avoid. They include:

  • Applying for multiple credit cards or loans at the same time. Every time you apply for new credit, your score takes a hit, so avoid applying for too many credit cards or loans at once. New credit accounts for 10% of your FICO score.
  • Closing unused credit cards. The length of your credit history makes up 15% of your FICO credit score, and bureaus like to see consumers maintain longstanding relationships with their lenders. Also, unused credit cards help keep your credit utilization ratio lower, so consider keeping those old credit card accounts open, even if you have no plans to use them.
  • Using only one type of credit. Your credit mix is the last 10% of your score. Credit bureaus like to see consumers use credit cards alongside other borrowing options such as auto loans, mortgages, and student loans.

Bottom line

No matter how long it takes to build credit, start today to see rewards in the not-too-distant future. Remember, the goal isn’t to use your credit card every time you can, but to establish a positive payment history and improve your credit file. After enough time has passed, you should see your efforts bear fruit.

Discover it Secured

Discover it Secured

Discover it Secured

Benefits

  • 2% cash back at restaurants and gas stations
  • Refundable security deposit
  • Cash back matching after one year
  • FICO Credit Score monitoring
Advertising Policy

FinanceBuzz.com is an independent, advertising-supported website. Some of the offers that appear on this page are from third party advertisers from which FinanceBuzz.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear).

FinanceBuzz.com does not include all financial or credit offers that might be available to consumers in the marketplace. FinanceBuzz.com does not include all companies or all available products.

FinanceBuzz has partnered with CardRatings for our coverage of credit card products. FinanceBuzz and CardRatings may receive a commission from card issuers.

Editorial Disclaimer

The editorial content on this page is not provided by any of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone.