How Long Does It Take to Build Credit?

If you don’t have any credit, surely that must be better than having bad credit, right? In some respects, sort of, but having no credit history can also be extremely limiting. Building credit is important for securing better loan options, better interest rates, and qualifying for mortgage and rental applications. Plus much more. But if you’re starting from zero, how long does it take to build credit?

We’ll tell you how you can beef up your credit report without going into debt. We also want to warn you getting a good credit score takes time, but it’s worth it for your financial future. 

What Is a Credit Score and Why Does It Matter?

A credit score is a number that ranges between 300-850. A low score is bad and a high score is good. A lot goes into a credit score, but what the number is meant to show is a snapshot of your creditworthiness. Any entity that would lend you money looks at it. That would include credit card companies, personal loan lenders and mortgage companies. Landlords, insurance companies and even potential employers may check your credit as well. So a low credit score could prevent you from renting somewhere, getting a loan with a decent interest rate, landing a job and more. So your credit is very important. 

These are the five factors that go into your credit score:

• 35% – payment history (whether or not you’ve made payments on time)
• 30% – credit utilization (how much you owe)
• 15% – length of credit history (how long you’ve been borrowing)
• 10% – credit mix (do you have multiple forms of credit)
• 10% – new credit (have you opened new lines of credit recently)

Credit scores don’t give the full picture of financial responsibility, but these factors explain why lenders use it. It shows if you borrow a lot and whether or not you tend to make payments on time.

How Long It Takes to Build Credit From Scratch

If you have no credit history, that may seem like a good thing because it means you probably have no debt. However, lenders are wary of no credit just like they are with bad credit. You haven’t shown you’re an irresponsible borrower, but you have shown you’re a responsible one either. 

So how long does it take to build credit? It will vary depending on several factors. But let’s assume you’re starting from nothing. 

First, you’ll need to open a line of credit, like a credit card. Then it will take about six months to establish a FICO score. That’s a specific model of credit score from the company FICO. There also are VantageScores. Although different financial entities check different scores, what the models use to calculate scores are pretty similar. 

Then, use the card, make payments on time and keep your credit utilization under 30%. This will be hard, because you likely won’t have a huge credit limit if it’s your first card. So start by just making a few small purchases a month on it. 

If you do both of those things, after that it’s more of a waiting game. Although it’s good to have a mix of credit, opening too many credit lines close together isn’t good for your score either. So be patient and space it out. Ultimately, expect it to take 12-18 months or more to build up to a good credit score (about 670 or more) and several years for an excellent score.  

Also note that if you want to build up damaged credit, that usually takes longer. That’s because certain things stay on your credit report for years, like bankruptcy and missed payments. 

How to Build Credit Faster: 6 Smart Strategies

These are some actions that can get you on the path to building credit.

• Open a secured credit card. Secured credit cards are cards that come with a deposit and typically a low credit limit. The deposit serves as collateral for your purchases. So that combined with the low limit act as safeguards when you either lack credit or have bad credit. 
• Become an authorized user. This is when you get added to another existing account and the positive payment history becomes part of your report. This might include becoming an authorized user on your parent’s card or a significant other. But keep in mind negative payment history would also go on your report. 
• Credit-builder loans. These loans are exactly what they sound like. They’re small loans that you don’t need good credit to get. However, they work in reverse of a traditional loan. Instead of getting the money first then paying it back, you pay the lender in order to receive the money. 
• Consistent on-time payments. This is a big one. Anytime you take out a loan it should be a priority to make the full payment on time each month, and for credit cards the full balance. 
• Low credit utilization. Don’t max out your card. So if you have one credit card with a limit of $500, don’t spend it all. That puts your utilization through the roof. Instead, use the card for small purchases like subscriptions to keep your utilization under 30%. Then you can eventually ask for a higher credit limit. 
• Minimal new credit applications: Although having a mix of credit is beneficial, opening new credit lines also hurts your credit score. It’s a fun little contradiction to navigate, but when you’re building credit, the bigger categories like on-time payments and low utilization matter more. 

Budgeting and Credit-Building Tools to Try

Set up your credit card balance to be paid in full automatically by the due date. That way you won’t have to worry about doing it yourself. Just make sure you have enough money to pay the full balance. 

You also can get free weekly credit reports from the three major bureaus online (TransUnion, Equifax and Experian) at annualcreditreport.com. Not only is this good for checking progress, it’s also how you would check for errors. 

Budgeting apps not only can help you keep track of your credit card spending or loan payments. Some have other credit-building features. The budgeting app Cleo, for example, is a cheeky chatbot that’s also programmed to help track your spending and crush your bad money habits before they get serious. It also offers the Cleo Card, which is a secured credit card that can help you build your credit. There’s no credit check, and it reports to all three bureaus. 

In addition to early paycheck access (up to $750 of your paycheck before payday), the app EarnIn also offers free credit monitoring. It will alert you of important changes in your creditor report and show your credit usage. 

What Slows Down Credit Building (and How to Avoid It)

These missteps will slow down your credit-building progress:

• Missing a single payment. Automate your payments so you don’t have to worry about forgetting. And don’t spend available credit you won’t be able to pay back. 
• Using too much available credit. Do the math on how much 30% of your available credit is and don’t go above that. For example, if your only card’s credit limit is $500, don’t put more than $150 on it before paying it down. 
• Frequently opening/closing accounts. Opening accounts can hurt your credit score because of the hard inquiry. Closing an account can hurt your credit history if it’s an older one and affect your credit utilization.
• Not checking credit reports for errors. Go to annualcreditreport.com to check your credit reports regularly. That way you can spot errors — which do happen — before they can do too much damage. 

How Long Does it Take to Build Credit? Be Patient, But Proactive

While there’s a lot you can do to build credit, one of the key parts of that is being patient. One payment on one card doesn’t give the credit bureaus enough information on your borrowing and spending habits. You have to show long-term consistency and responsibility. That means never missing a payment or letting your credit utilization get too high. Though you can certainly live without ever building credit, having a good credit score is extremely beneficial. It can help you secure better loan options and interest rates, lower insurance rates, and even affect your housing and employment options. But with these tried and true strategies and some time, you’ll be well on your way to a solid credit report. 

FAQs: How to Build Credit