How Long Does It Take To Build a Good Credit Score?

Please note: American First Finance does not offer a credit-building product or solution. This information is for educational purposes only.

You’ve probably heard it several times — that a good credit score is important. A good credit score may help secure loans, rent-to-own agreements, and other payment solutions and, in some cases, apply for jobs. But how long does it take to build a good credit score?

Research shows that 25% of Americans have a fair-to-poor credit score range, with only 13.1% with a “perfect” score. Studies also show that 28 million American adults are credit invisible, meaning they are without a credit history, and means that lenders may not be able to access information on their credit score or history.

While that could be disheartening, the good news is there are ways to grow and improve your credit score.

How long does it take to build a good credit score?

A credit score isn’t just any number. Your credit score can represent a way to express financial trustworthiness to lenders and payment solution providers. So, how long does it take to build a good one? Whether your goal is building a credit history or working toward a higher credit score, it generally varies, depending on your goal. Each person (and credit score) is unique, so several factors may dictate whether it takes more time or less for each person.

How to build a good credit score

Just like learning to build something or to cook from scratch takes planning and consistent effort over time, so does improving your credit score. Here are tips to help build up your credit score:

Understand your credit history.

Think of your credit history as less about a “score” that defines your creditworthiness and more like a unique and continually evolving number that can improve over time.

Lenders and payment solution providers look at the length of your credit history when assessing your borrowing potential. So, therefore, every new line of credit, loan, rent-to-own agreement, or other payment solution or debt incurred contributes further information to your credit score.

Adhere to all payment schedules.

Making payments on time is a good thing when building a credit history. It can be helpful to design a monthly payment schedule or utilize tools like a bill-tracking calendar to help remind you to pay on time.

Minimize your debt load.

Some keys to reducing your debt load include paying off debts promptly, particularly those with high-interest rates like credit cards. Efficient debt management may also help affect your credit utilization ratio (the amount you can borrow.)

Use your credit wisely.

Contrary to popular belief, having no debt isn’t necessarily helpful when building a good credit score. Using moderate amounts of available credit and making on-time repayments may aid in communicating reliability to lenders and payment solution providers.

Build credit for your financial tomorrow.

You can explore different types of credit while still engaging in other activities, like renting to own furniture or other products. Actions you take may impact your credit score, so consider the present and future when considering your options.

Maximize free tools.

Did you know there are free tool options to help you with credit score? Useful options include obtaining a free credit report and other helpful tools, like budget-tracking websites and apps.

Limit your credit applications.

There is such a thing as too much of a good thing, including applying for new credit or a loan or a rent to own agreement. Frequently doing so may give lenders and payment solution providers an unclear impression, making them wary about offering loans, lines of credit, or other payment solutions like rent-to-own agreements. Hard inquiries into your credit file may potentially lower your credit score. Occasional applications and credit inquiries are typical but try to avoid constantly making hard inquiries on your credit scores, especially over a short period of time.

Allow credit accounts to age.

Lenders and payment solution providers tend to value long-standing credit lines that consumers carry—it may communicate financial stability and reliability. Consider maintaining your oldest credit card and using it occasionally, paying balances in full each time.

Last Thoughts for Your Credit Score

In conclusion, moving forward toward a good credit score is a process that takes time.

Time, patience, smart strategies, continual monitoring of finances, moderate use of available credits, and consistency in payment schedules—all are good habits that tend to paint a promising financial portrait. Over time, those habits may help lenders and payment solution providers recognize the hard work you’ve put into building a favorable credit score.