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You will need credit if you want to take out a mortgage, get a credit card, or even finance a once-in-a-lifetime vacation. Think of your credit as your financial power. With good or excellent credit, you can get a loan for a car, a credit card to make it easier to make online purchases, etc. But building credit doesn’t happen overnight. So if you are wondering how long does it take to build credit, you should know that it takes about six months to build an initial credit score and even longer to build good credit.
Highlights & Key Takeaways
- Establishing a good credit score takes patience and discipline
- It will take approximately six months to build your initial credit score
- There are three different scenarios: building credit from scratch, rebuilding credit after it drops, improving credit from poor to excellent
- The process of improving your credit is not a one-and-done strategy - it takes a lifetime of dedication, perseverance, and sound financial decisions
How Long Does It Take to Build Credit?
You can start the process of building credit as soon as you turn 18. This is when most creditors and lenders will consider credit products to allow you to demonstrate your creditworthiness. Once you have some financial product in your name (we’ll discuss that more shortly), generating that initial FICO score takes about six months.
This all said, there are three different scenarios regarding building credit and the time it takes.
- Building credit for the first time: takes about six months and is an ongoing process to help protect, if not improve, your credit score
- Rebuilding credit after recent inquiries: can take several years. For example, every time a hard credit inquiry is applied to your credit report, it impacts you by about five points. Those credit inquiries sit on your credit report for up to two years. It takes even longer to rebuild credit after bankruptcy as it will sit on your credit report for up to ten years, depending on if you filed Chapter 7 or Chapter 13.
- The time it takes to improve credit: such as going from poor to excellent, from good to excellent, or from fair to excellent, takes time, and there is no magic number. But getting an excellent score specifically can take years - up to 22 years - because you need to demonstrate a long and healthy credit history to get there. When it comes to a perfect score, the majority of people with 850 credit scores are above the age of 57.
Building your credit via the FICO score and the VantageScore take about the same time. The name of the game is responsible financial management.
Why Building a Strong Credit Score Requires Time?
Your credit score is comprised of five primary factors. FICO credit scores are calculated using the following criteria:
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit: 10%
And your VantageScore utilizes a very similar approach.
- Payment history: 40%
- Depth of credit: 21%
- Credit utilization: 20%
- Balances: 11%
- Recent credit: 5%
- Available credit: 3%
The reason it takes several months to build that score is that the credit bureaus need to see activity, over the course of time, to see how you are managing each of those factors. So, they need to see at least six months of responsible payment history, ensure you manage your utilization, and ensure you are not taking on more than you can handle.
Useful Tips for Accelerating Your Credit Building Process
Thankfully, building your credit score is not rocket science. There are some tried-and-true practical tips that you can follow. Check out these recommendations, and try them if they make sense to you.