How long does it require to build credit from scratch?

Credit scores and mortgages

How long does it require to build good credit from scratch?

Whether you are recovering from a financial error or starting from scratch, you may be wondering how long it takes to build excellent credit. Although you can’t get a decent credit score overnight, you can create one from scratch in three to six months. 

Keep reading to learn about the simplest ways to build a credit report so that you can access the best terms on mortgages, credit cards, and other financial products. 

How long does it take to establish decent credit?

The good news is that if you start from scratch, it will not take long to establish your credit history. According to Experian reports, one of the largest credit bureaus, three to six months of regular credit activities are required before your documents become thick enough to calculate your creditworthiness.

The size of your file depends on the number of points you earn during this period and how often you use your accounts. Here are some of the quickest methods to establish good credit.

1) Get your credit card

If you are not eligible for a “normal” unsecured credit card, you can apply for a secured credit card. Since a secure card requires deposits and doesn’t implement restrictions, it is easier to access than a non-secure card. 

Finally, credit cards can help you get credit faster because your information is shared with credit bureaus and other financing companies. 

Many credit card issuers provide information about your credit card balance and payment every month. Therefore, if you buy once or twice a month and then cancel, it will be reflected in your credit history. 

Both FICO and Vantage Score significantly impact your payment history and the credit limit you use. Therefore, every time you make on-time card repayments and keep your outstanding balance below 30% of the available amount, you will get positive results about your credit report.

2) Pay off the installment loan

You can also expand your credit profile by making on-time repayments and acquiring an installment loan. Do you know that your student loan is an installment loan? Or, you can apply for a personal loan and return it in installments. 

Typically, credit diversity has a significant positive effect on your score. Making small personal loans based on your credit cards is an effective way to build good credit from scratch.

3) Become an authorized user of someone else’s account

Another way to fill out your thin credit profile and built credit faster is to add yourself to another account as an authorized user. You can do this if you are closely related to the owner’s account. Therefore, this strategy is most suitable for parents or spouses. 

If your parents want to add you as an authorized user, you will benefit from their excellent credit. You will not experience the same effects as your credit card. Still, it will help even if you have never used an issued credit card.

Why should you maintain good credit? 

Establishing a good credit history is critical to your long-term financial health when preparing to borrow for large purchases (such as vehicles and houses).

Although it takes time to build a good credit history from scratch, it is not impossible. However, once you develop it, it’s essential to stay focused to avoid undermining everything you work so hard to establish.