Whether you’re recovering from a credit mistake or building credit from nothing, building credit can be easy when you take certain steps. If you already have established credit and would like to increase your score, you can focus on the main factors that contribute to your current score. If you are building credit from scratch, it can take up to six months or even longer to get an excellent credit score.
Rebuilding Credit
An emergency came up and your credit score fell into the poor range, now what? Luckily for you, rebuilding your credit score isn’t impossible. It does take persistence and dedication however to increase your score.
The best thing you can focus on for rebuilding your credit are the top factors contributing to your score. These include credit utilization, payment history, and credit history length. If you notice that your credit utilization is high, then that means you have probably spent too much of your available credit. You can fix this by making larger payments if possible in order to lower your balance as quickly as possible. Just by lowering your credit balance, you will see an increase in your credit score over a few month period.
Payment history is also a large factor when determining your credit score. Missing a payment can be reported and unfortunately stay on your report for years. This is why it is extremely important to make at the very least the minimum payment on each of your bills for every billing period. Bettering your payment history is not going to happen overnight, as years of payments are taken into consideration for assigning your score.
Credit history length unfortunately is also one of those factors that will not get better overnight. The longer you have a history of credit, the better your credit score will be. This is because it shows that you can manage your credit and finances over a long period of time. If you are planning on buying a home by a certain age, then it is recommended to start building credit as early as possible so your credit is sufficient for taking out a mortgage.
Building Credit From Scratch
Building credit from scratch is actually not as hard as it seems. After opening a credit account, you can receive an official credit report as soon as six months afterwards.
It is highly recommended to start building credit early on in order to have a sufficient credit score throughout your adult years. You can start building credit from scratch younger than most would assume. Parents are able to put certain bills in their children’s names in order to help them build credit. Parents can also place their children on their accounts as authorized users. Younger adults can build credit from school loans or student credit cards.
A common concern from young adults is how to get started if they have no credit history and want to apply for a credit card. All credit cards are made different and there are credit cards out there for those who have no credit history. Student and secured credit cards are the best way to build credit from scratch without help. After applying for a starter card and receiving approval, you can expect an official credit report from FICO after six months.
Building credit does take some time, but with dedication and perseverance it can be done. In six months time you can build credit from scratch. In a few years time you can see an established credit score start to rise.
