How long does it take to improve your credit score? If you’re hoping to buy a home, having a good credit score is key, since it helps you qualify for a mortgage. So if your credit score is low, knowing how long it takes to raise it to home-buying rang can help you plan.
While raising a credit score can’t happen overnight, it is possible to raise your credit score within one or two months. However, it could take longer, depending on what’s dragging down your score and how you handle it.
How long does it take to raise a credit score?
First off, what’s considered a good score versus a poor one? Here are some general parameters:
- Perfect: 850
- Excellent: 760 – 849
- Good: 700 to 759
- Fair: 650 to 699
- Low: 650 and below
While it varies by area and type of loan, generally, lenders will look for a score of 660 or higher to grant a mortgage. If you’re looking to boost your credit score fast, here are some actions you can take.
Correct Errors On Your Credit Report
Correcting errors on your report is a relatively quick way to improve your credit score. If it’s a simple identity error you can get that corrected within one to two months.
If it’s an error on one of your accounts, though, it could take longer, because you need to involve your creditor as well as the credit bureau. The entire process typically takes 30 to 90 days. If there’s a lot of back-and-forth between you, the credit bureau, and your creditor, it could take longer.
The first step to correcting errors is to get a copy of your credit reports from TransUnion, Equifax, and Experian, which you can do at no cost once a year at annualcreditreport.com. Next, review them for errors. If it’s an error on one of your accounts, you must refute that error with the bureau by providing documentation arguing otherwise.
Credit bureaus typically have 30 days to investigate the error. If they agree that it’s an error, they will remove the item. The credit bureau may also ask for additional information or ask you to discuss the information with the creditor involved, If that’s the case, stay on top of communications with your creditor so you can get things resolved as quickly as possible.
Deal With Delinquent Accounts
Bringing delinquent accounts current and settling accounts that are in collections can also boost your score fairly quickly. Once the creditor or collection agency reports your account update, you should see a positive bump in your score. Keep in mind, though, that your late payment history will remain on your credit report for seven years.
If you have bad accounts that have been on your report for six years or more, you may not want to worry about settling them or bringing them up to date. This can re-age the account, and if you fall behind again, it will stay on your credit report for another seven years.
Lower Your Credit Utilization
Credit utilization refers to how much you owe compared with the amount of credit you have available. For example, if you have a $10,000 credit limit across all your credit cards and you have balances totaling $9,000, you’ve utilized 90% of your credit. This drags your credit score down.
What these consumers often need to do is pay down the balances on their existing credit accounts, which can be a challenge if they’ve allowed the balances to creep up over time. The ratio of what’s owed to the amount of credit available represents 30% of the consumer’s score, so rapid improvement is possible if there’s a large amount of money available to pay down balances.
Paying down balances to below one-third of your credit line is a good idea. Any payments you make will be reflected on your credit report as soon as your creditors typically report once per month, so if you make a payment that lowers your credit utilization, that should be reflected on your credit score within two months.
If you’re regularly using your credit card but you want to keep your utilization low so you can apply for a mortgage, you may want to pay down your credit card balance on a weekly or biweekly basis. This ensures that your balance is as low as possible whenever your creditor reports your payment history to the credit bureaus.
You can also decrease your card utilization by getting more credit, but this approach can backfire. Consumers sometimes assume that by getting more credit, their credit score will improve. If you have $3,000 balance on a card with a $4,000 credit limit and you’re approved for a new credit card with a $1,000 limit, you now have $5,000 in total credit lines. Instead of using 75% of your available credit, you’re now using 60%. That’s better right?
Not necessarily. Just applying for credit lowers your credit score, and that effect lasts for months. For the first few months after you apply for credit, your credit score may actually go down.
You can try getting around this by asking a credit limit increase on a card you already have. Be sure to ask whether they do a “soft” or “hard” credit pull, though, since hard credit inquiries are the ones that impact your credit. A creditor may be willing to give you a credit line with a “soft: pull, which will not hurt your credit score.
How to Raise Your Credit Score For The Long Haul
Once you’ve corrected errors, settled your delinquent accounts, and brought your credit utilization under control, the only other things that will improve your score are time and developing good payment habits. For example, if you tend to forget to make payments, you can set up automatic payments so you don’t forget.
