Your credit score is an important part of your overall financial health. A healthy credit score can help you qualify for loans, get approved for the best interest rates and even rent an apartment.
Unfortunately, missed payments and other financial setbacks can have a negative impact on your credit score. This may leave you wondering how long it takes to fix the damage and regain financial stability.
Repairing a damaged credit score requires time and strategic financial decisions. Here’s how long you can expect it to take, as well as some tips to point you in the direction of your goals.
How Long Does It Take To Repair a Credit Score?
There’s no overnight solution that will fix bad credit. Rebuilding your credit score can take months or even years. How long it takes can depend on the reason why your score is low, and how low it is.
If your score is low because you’re carrying a lot of debt, you can repair your credit in a shorter amount of time by paying down your debt. On the other hand, if you have a bad credit score due to negative marks on your credit report such as missed payments or bankruptcy, your credit could be affected for several years — up to 10 in the case of bankruptcy.
Repairing your credit score can be a journey, but there are some simple steps you can take to get on the right track and build good credit.
How To Improve Your Credit Score
There are many different factors that go into calculating your credit score. FICO Score and VantageScore are the two main credit scores that lenders look at. They each take the information from your credit report to calculate a score that represents your creditworthiness.
Establishing excellent credit habits can help you rebuild your credit. Here are some steps you may want to try.
- Get a copy of your credit reports. You can get a free credit report from annualcreditreport.com every 12 months. The three major credit bureaus are Experian, Equifax and TransUnion. Reviewing the information on each report can help you understand what goes into your credit profile. It can also help you find and fix any errors that may be damaging your score.
- Make on-time payments. Payment history is one of the most important factors in determining your credit score. Missed or late payments can negatively affect your score, but making payments on time can help you establish a good credit history and build your score.
- Reduce your debt. The amount of debt you have is another big factor that can affect your score. If you have a lot of credit card debt or big loans compared to the amount of money you make, it can lower your score. You can help boost your score by paying down debt.
- Keep your credit utilization ratio low. If you have revolving credit accounts like a credit card or personal line of credit, you should try to keep the balance low. Your credit utilization rate is the amount of total available credit (credit limits) you have versus the amount of credit you’ve used. Keeping this below 30% may help contribute to a healthy credit score.
- Don’t close your old accounts. The age of your credit accounts and what type of accounts they are can also impact your score. A longer credit history with a diverse mix of credit types (such as personal loans, student loans and credit cards) can show lenders that you have experience in managing different types of credit.
- Don’t open too many new accounts. Depending on which lender you use, submitting an application could affect your credit score. These are known as credit inquiries — hard inquiries will appear on your credit report and can temporarily lower your credit score. Your score will normally bounce back, but be careful not to over apply.
- Try a secured credit card or credit builder loan. If you do need to borrow money while you’re rebuilding credit, try looking into different credit options. There are products that are designed to help you establish a positive credit history so you can build up to a good credit score.
- Monitor your credit. While trying to build credit, you should keep an eye on your score and your reports. Credit monitoring can help you catch errors and inaccuracies and ensure that negative items are coming off your report when they should.
How Long Does Negative Information Stay On Your Credit Report?
The credit bureaus and credit reporting agencies collect information about your borrowing habits from lenders to create your credit report and calculate your score. Not all lenders report to the major credit bureaus, but the ones that do, report both the good and the bad.
Most negative marks stay on your credit report for seven years. The good news is that they eventually come off your credit report, and the older they are the less weight they carry when determining your score. Here are some examples of negative marks that can contribute to bad credit and how long they’ll be in your credit file.
- Late payments. Seven years.
- Foreclosures. Seven years.
- Collections or charge-offs. Up to seven years.
- Chapter 7 bankruptcy. 10 years.
- Chapter 13 bankruptcy. Seven years.
How to Dispute Errors on Your Credit Report
Errors on your credit report could be hurting your score and contributing to bad credit. Examples of errors include:
- Someone opening a new credit account in your name.
- Collection charges for a service you never received.
- A lender reporting that you missed a monthly payment when you didn’t.
This is one of the reasons why checking your credit report is so important. Finding and reporting errors quickly can help prevent fraud and identity theft.
If you find an error on your credit report here are some steps you can take to get it removed.
- Contact the credit bureaus. When you find an error you should immediately contact the credit bureaus. You’ll need to provide them with documents that support your claim, a copy of the credit report where the error appears, instructions on how to correct or remove the error and some personal information. Be sure to keep copies of everything you send and any responses from the bureaus.
- Contact the company that reported the error. You can also contact the business, lender or card issuer that reported the error. You can request that they investigate your claim and send them the supporting documentation. You should save copies of all communications.
Should You Hire a Credit Repair Company?
When you’re working to repair your credit, it can be tempting to hire a credit repair service. While your unique circumstances will determine whether this is the right option for you, there are a few things you should know before you decide.
Credit repair companies can help you get errors removed from your credit report. You can do this yourself but when you hire them they’ll dispute the errors on your behalf. Keep in mind that credit repair services can be expensive. Many of them charge a monthly fee and it can take a while to repair credit. You should also keep an eye out for scams, if it sounds too good to be true, it probably is.
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