Saturday, 8 February 2020

How Long Does It Really Take To Build Credit?

Today you're going to learn how long it takes to build your credit whether you have no credit or bad credit. I have seen a lot of people asking how long does it take to build up credit and get a good credit score. So in this article, I am going to answer that question.

  • No Credit
  • No Credit Cards
  • No Car Loan

There's going to be two scenarios when it comes to that, somebody who has no credit where they have applied for nothing, they have no credit cards before, no car loan, nothing on their credit. Nothing they're paying on currently. 

  • Bad Credit
  • May Or May Not Have Good Accounts
  • Has Bad Account

Another scenario will be somebody who has bad credit where they may have good accounts on their credit report or they may not have any good accounts at all, but they definitely have negative accounts showing up on their credit reports.

Credit Score Type: Vantage Vs FICO

Another factor that comes into play is going to be the credit type, there are vantage scores and FICO. And each one takes a different amount of time of you using credit in order to generate a score, and just so you know, there is no such thing as a zero score, credit score all have a range of icon vendor scores start at 300 and go to 850, you don't have zero but you just don't have enough information on your credit report for a grade to actually be given to you as far as your credit usage.

Vantage Score: 2-3 Months Of Using Credit

With a vantage score, it can take anywhere from 2 to 3 months of you actively using credit in order for you to generate a score. A vantage score is a score that was actually created by the credit bureaus, so you're going to see that score if you're looking at Credit Karma, or if you have credit monitoring or something like that. 

FICO Score: 6 Months Of Using Credit

It takes about 6 months of using credit to actually generate a score. FICO score is what lenders normally do a pool on when you going to apply for something, they're going to be seeing a FICO score usually. That's going to be the matter that we're going to go by, so you're going to try to use credit for at least 6 months in order to try to build up a credit score.

Tools Used To Build Credit: Credit Builder Loan Vs Credit Cards

Another important factor is going to be the tools you use to build up your credit. I've heard of people using credit builder loans and there are also credit cards whether they are secured or unsecured credit cards, 

Credit Builder Loan

With a credit builder loan, those don't build your score up as fast as a credit card will. And I noticed from experience and seeing it on hundreds of people's credit reports that whenever somebody got a credit card their score always jumped up a lot faster and they jumped up greater than they did when somebody got a loan to try to build up their credit. With that being said, it is still going to be good for you to have at least one loan on your credit report because a part of your credit score is grated on you have different types of credits, so most people are going to have at least a car loan on their credit report, but if you don't have that or you don't plan on getting one soon, then at least have some type of loan other than the car loan would be good to have on your credit report just to have one.

Credit Cards

But as far as building your score up and building up the faster way you want to use a credit card to do that. Whether be secured or unsecured and secured just means you put down a deposit in order to acquire that card and you get access to be able to use it, and an unsecured just means that you don't have to put down the deposit to get the credit card. 

Should Reach Low To Mid 600's After 6 Months (If you have no negative accounts)

As I stated you want to use a credit card for 6 months and then you get a score, and that's going to be the best scenario to do if you have absolutely no credit on your credit report. And what you'll see is in most cases a lot of people I've seen they end up in the 600's, not the very high 600, maybe the low to mid 600's after using a credit card if they have no other information on their credit report, other than the credit that they've just been using to build up credit. Someone with bad credit is going to be a little bit different. Your score is going to build up a lot slower, so I don't know where you are right now, but after you start using the credit account, you start using it and keeping it in good standing your score isn't going to move up fast as someone who has absolutely nothing else on their credit report. It's because negative information acts as a weight.

  • Let's say you're using your credit card the right way but if you have negative stuff on your credit report, you're going to be moving a lot slower even though you're still doing the same motions and actions as somebody who doesn't have anything on their credit report. The negative information does slow you down as far as how many points you get and the rate at which you are able to accumulate more points for your score. 

What that means is that you really have to deal with those negative accounts, you can't just get new credit and expect that to make the lenders overlook that negative stuff that happens in the past, you still have to use good credit in a good fashion, but you also need to deal with those negative accounts and the only way to deal with them is to have them removed from your credit report because if they're still on there they're still calculated in your score, if you paid them off it's not going to necessarily help you with what you're trying to do, you would have to take some type of steps to try to get that removed in your report in order for it to actually improve your score.

How To Get 800 Credit Score

One thing I want to tell you is don't expect your score to get up to 800 after you've been using credit for about a year or so when it comes to credit, the age of your credit report plays a really big factor. In credit terms, 1 to 2 years isn't a long amount of time, you would have to be using credit for at least 10 years or maybe more than that to really see your score get up close to 800. But I've seen a lot of people they always want to get up there really fast but, honestly, it doesn't make too much of a difference because, by the time you get to 720 or more, you will still being in good standing to get low-interest rates and get approved wherever you go.

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