Introduction
When it comes to fixing your credit score and repairing your credit, you should know that it’s possible to do so. While it may not be quick, easy, or happen overnight, you can make significant improvements that will help you get back on track with your finances. In this article, we’ll show you how long it takes to repair credit and where to start so you can begin the process of getting back on track today.
How Long Does It Take To Repair Credit?
How long to repair credit depends on the severity of the damage. Credit scores are a snapshot of your credit history, and they can range from 300 to 850. The higher your score, the better it is for you financially. If you have a low score, that means you have negative information in your file that lowers lenders’ confidence in approving loans and lines of credit. Your credit score can be used to determine whether or not someone will issue a loan or line of credit to you, as well as what type of terms they’ll give you (e.g., interest rate).
Start by getting your credit score.
If you want to get your hands on a credit score, there are two different routes to take. The first is to visit AnnualCreditReport.com, where you can request a free credit report from all three of the major credit bureaus (Equifax, Experian, and TransUnion) once every 12 months. You may have heard of this site because it’s required by law that they give out one free report each year—but don’t let that be an excuse not to use it! There’s no need for anyone else but you to see your report when applying for loans or credit cards; plus, if there are any errors in your history that could be holding back your finances (which we’ll get into soon), now’s the time to make sure everything is correct before moving forward.
Work on paying down credit card debt.
A few different methods can be used when deciding which card to pay off first. One way is to go with the card with the lowest balance since it’s likely to have the slightest interest rate. Another method is to go with the card with the highest interest rate since you want to minimize your debt as much as possible. Some people choose this route because it’s easier for them; however, if there are two cards at similar rates and one has a higher balance than another, then it might make more sense (in terms of long-term savings) to pay off that one first. If you have multiple credit cards at similar rates and they all have high balances but not enough money in your budget each month, consider going into default on one of these cards until you can afford them again (or get another job).
Pay all your bills on time.
If you have a credit card balance, pay it off in full each month. If you don’t have the money to pay off your entire balance, start making minimum payments on time or even earlier than that.
If you’re late on any of your bills, then you will be charged a penalty (which can also lower your credit score) and this could further damage your credit standing.
If necessary, close credit cards that you are not using.
If you don’t currently have a credit card, this might be the time to open one. Having at least one credit card or installment loan with a high score will help your score stay in the good range for longer.
However, if you already have several cards and are only using one of them on occasion, consider closing some of your unused accounts. You can always open new accounts later when needed and it will look better on your report if there are fewer cards listed than in previous years. Closing inactive accounts are often recommended by those who want to maintain a good score because it helps lenders see that you are committed to paying back debt and not just running up charges without paying anything off each month.
If necessary, close credit cards that you are not using but make sure not to close any active ones unless they’re costing more money than they’re worth (like high-interest rates).
Don’t open too many new accounts at once.
If you have bad credit, the last thing you should do is open up a bunch of new accounts at once. If you do, too much debt will put you at risk of defaulting on your loans and possibly even having your wages garnished.
Instead, focus on paying down existing balances and maintaining good payment history across all accounts. Then, when your finances are in order, consider opening one new account at a time—but only if it’s necessary to help build credit or improve your financial situation.
Don’t apply for too many credit cards within a short time.
It can be tempting to apply for multiple credit cards when you start building your credit but don’t make the mistake of applying for too many at once. The more applications you submit in a short amount of time, the more likely it is that lenders will flag your application as risky and deny approval.
According to FICO, consumers who apply for five or more credit cards within a two-year period are 67 percent more likely than those who applied for just one card during that same timeframe to have their application declined. It’s important to keep this in mind if you want your new credit card applications approved!
Be mindful of how much of your available credit you use.
Don’t use too much of your available credit. This can be a tough one for people who have spent decades in debt, but it’s important to remember that using your entire credit limit won’t make you any less responsible than using only 10%. If you have $10,000 worth of available credit cards and spend $100 per month on each one, then it will take three years for those accounts to become “paid off” and start helping your score. That’s because the balance is still sitting at zero; it’s just hidden from view by being moved from one card to another. Only when those balances disappear from all of the accounts will they actually help improve your score.
Be mindful of how much of your available credit you use every month—even if it falls well within safe limits—and consider lowering it if necessary so that there’s more space between what you’re paying back each month and how much room remains on each account (i.e., how many dollars are still owed). This can give creditors confidence that they’ll get their money back if something happens with an account before its term expires (i.e., before interest kicks in).
By following these steps you can start to repair your credit score and get back on track after damaging it in the past.
It’s important to understand that repairing your credit score is a long-term process. You can’t just take a few steps and expect to see results immediately. It’s going to take time, and you’ll need patience in order to see real progress.
The first step is always the hardest: admitting that there’s a problem with your finances. Once you’ve done this, then it’s time to look at where exactly things went wrong so that you know how best to move forward with repairing them. Don’t be upset if it wasn’t one big mistake; instead, consider what small choices added up over time until everything snowballed into disaster territory
Conclusion
We hope that you now have a better understanding of what goes into repairing credit and how long it will take. The best thing to do is not to get into the situation in the first place, but if you do find yourself there, then be sure to follow these steps and don’t spend too much on your credit card. Remember that the most important thing is paying off your debt as quickly as possible so your score will start improving right away! We wish you all the best in rebuilding your credit.
