• How Long Will It Take to Improve My Credit Score?

    Brandon Cornett

    By Brandon Cornett
    © 2011 All rights reserved

    Reader question: "I have bad credit and want to improve it before trying to buy a home next year. How long does it take to improve a credit score significantly?"

    It takes five months, two weeks and three days. And it usually happens at midnight when there's a full moon. Just kidding. It's a dry subject, so I have to inject some humor once in a while. Let's get serious here...

    How long it takes to improve a credit score will depend, in part, on how actively you are trying to improve your score. It also depends on the cause(s) of the credit problem. Because of these and other variables, it's hard to put an exact time frame on it.

    Consider the difference between these two scenarios:

    John is a young man with a short credit history. During that short time, however, he has made a lot of mistakes. He has missed his loan payments on several occasions, and it was subsequently reported to the credit-reporting companies. So his FICO credit score is hovering around 580, which is not so good.

    How long will it take John to improve his score? Probably as long as the length of his current credit history -- assuming he changes his bad behavior.

    Jane is 43 years old and has been using credit responsibly for more than 20 years. Thus, she has a long history and a lot of data for the scoring systems to use. She also has a habit of paying all of her bills on time, and maintaining small balances on her credit accounts. As a result, she has an excellent FICO score of 795. But then she forgets to make payments on a certain card. She overlooks the reminders sent by the creditor, as well. So it gets reported to the credit-reporting companies and ends up lowering her score.

    How long will it take Jane to improve her score? Not as long as it took John to improve his. Jane's slipup was an isolated event, as evidenced by her long history of responsible credit use. John had a pattern of slipups from day one, so there isn't much good to offset the bad.

    Now you can see why it's so hard to answer this question. Your FICO credit score is "built" from five categories of information. It's a dynamic number that changes constantly. And your credit usage going forward has a lot to do with how long it takes to boost the score. That's a lot of variables -- a lot of moving parts, if you will.

    The "Big Three" Credit-Scoring Factors

    With that said, I will say that you can make significant improvements within a matter of months -- if you are proactive about improving your score.

    Of course, in order to be proactive about this, you must first understand the primary factors that influence your score. Then you can focus your energy on the things that will help you improve your credit score as quickly as possible.

    In truth, there are dozens of individual factors that influence your score. But in this article, I'll focus on the things that will have the biggest effect in the least amount of time. How long it takes will still vary from one person to the next. But you can certainly expedite the process by focusing on the following:

    1. Your history of bill payments.

    By most estimates I've seen, your history of making payments can account for 35% of your score. So if you have a habit of neglecting car payments, credit card payments and the like, you need to correct that behavior immediately. Like other types of derogatory entries, late payments can stay on your credit report for up to seven years. So you want to avoid them if at all possible.

    2. Your credit card balances.

    This is another factor that influences your overall score. Having one or two credit card balances is not necessarily an issue. But if you have a lot of cards, or if you're nearly maxed out on one or more credit card, it can lower your score. The solution is to work out a budget that allows you to gradually reduce those balances, starting with the ones that are near their limits.

    3. The length of your credit history.

    There's nothing you can do to lengthen your credit history. But without realizing it, you could shorten your history. This in turn could lower your score. That's why you have to be careful when closing old accounts. In most cases, it's best to keep your oldest accounts open, even if you reduce the balance considerably. When you close your oldest account -- such as your first credit card from when you turned 18 -- you are in essence shortening your credit history.

    Closing unused accounts, or those that have low balances, is a good practice that can help you prevent identity theft. But you have to be careful not to close the oldest one. If you close anything, start with the newest accounts. Or better yet, keep the accounts open but pay the balances down as much as possible. This will show a long history of good debt management, and that's what lenders want to see.

    Conclusion: How Long to Improve a Score

    How long does it take to improve a score significantly? As mentioned earlier, the process and time frame will vary from one person to another. But you can expedite the process by first understanding how your credit score is calculated, and then by focusing your energy on the things that will have the biggest effect.

    If you pay all of your bills on time, reduce your credit card balances, close your old and unused accounts (but not the oldest one) ... you will be on the road to improvement. You could even see a significant change in your score within a few months. Only time will tell.

    I know that's not the definitive answer you were looking for, as to how long it takes to see results. But it's the best answer I can give you. Good luck.