How Long Does It Take to Build Good Credit From Scratch?

 April 8, 2020
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Whether you’re recovering from a financial misstep or starting from scratch, you might be wondering how long it takes to build credit. While you can’t get an excellent credit score overnight, you can establish one from scratch within three to six months.

Read on to learn about the fastest ways to build credit so you can access your best terms on credit cards, mortgages and other financial products.

How long does it take to build credit?

The good news is that it doesn’t take too long to build up your credit history if you’re starting from zero. According to Experian, one of the major credit bureaus, it takes between three and six months of regular credit activity for your file to become thick enough that a credit score can be calculated.

How thick your file becomes depends on how many loans you get during this time, and on how often you use credit. Here are a few of the fastest ways to build credit.

3 fastest ways to build credit

1. Get a credit card

If you can’t qualify for a “regular,” unsecured credit card, you can try applying for a secured credit card. Since a secured card requires a security deposit and doesn’t let you spend past your limit, it’s easier to access than unsecured cards.

At the end of the day, credit cards can help you build credit faster because of how often your information is reported to credit bureaus. Many credit card issuers report information about your credit card balance and payment each month. So if you make a purchase or two each month and then pay them off, that will be reflected in your credit history.

Both FICO® and VantageScore heavily weigh payment history, as well as how much of your credit you are using. Therefore, each time you make an on-time credit card payment and maintain your outstanding balance below 30% of what’s available to you, you create positive information for your credit report.

2. Pay off an installment loan

You can also add a little bit more to your credit file by getting an installment loan and making on-time payments. Did you know that your student loans are installment loans? Additionally, you can get a personal loan and pay it off in installments.

Essentially, diversity of credit makes a significant positive difference to your score. And having a small personal loan, on top of a credit card, can be an effective way to build good credit from scratch.

That said, you probably don’t want to take on debt you don’t need simply to build your credit. But if you need an installment loan, make sure to borrow only as much as you can afford to pay back and to make on-time payments.

On-time payments will improve your credit score, whereas late or missed ones are a surefire way to destroy it. Also note that if you can’t get an installment loan on your own, consider asking someone you trust to cosign.

Before you ask someone to cosign, make sure you are in a position to pay off the loan yourself. You don’t want to stick a friend or relative with the consequences if you aren’t able to handle the debt.

3. Become an authorized user on someone else’s account

Another way to pad your thin credit file and build credit faster is to have yourself added as an authorized user to someone else’s account. You can do this if you have a close relationship with the account owner, so this strategy works best with a parent or a spouse.

And, if your parents are willing to add you as an authorized user, you get the benefit of their good credit. You won’t see the same impact as you would with your own credit, but it does help — even if you never use the credit card you are issued.

Avoid these missteps to protect your credit

Unfortunately, it’s much harder to build good credit than it is to destroy it. While it takes three to six months just to accrue enough information in your file to be issued a credit score, it can take much less time to reduce it.

When you miss a payment or default on a loan, it can take your credit score down a notch. You can also hurt your credit score if you use too much of your available credit. It’s best to keep your credit utilization below 30% to preserve your credit.

Garnering lots of hard credit inquiries can also ding your score, so make sure to take advantage of soft credit checks or to keep any loan shopping within a 30-day window.

By avoiding these and other financial missteps, you can protect your credit score from getting damaged.

Why should you maintain good credit?

Building good credit is essential to your long-term financial health if you want to be able to borrow for major purchases like homes and cars.

Although it takes some time to build good credit from scratch, it’s not impossible. Once you build that credit, though, it’s important to stay on top of things so you don’t end up destroying everything you’ve worked so hard to build.

For even more credit-building strategies, head to our guide on how to increase your credit score.

Rebecca Safier contributed to this report.

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