Banking and Finance

How Long Does it Take to Build Credit?

July 27, 2021

Did you know that one in five Americans don’t know their credit score? On top of that, nearly half of them don’t pay off their balances each month. That’s one surefire way to hurt your credit score.

There are quite a few factors that go into determining your credit score but payment history is by far the biggest one. And, missing more than a few payments can leave marks on your credit report that will stay there for years to come.

So, if you haven’t been monitoring your credit score up until now, it’s time to start. You’ll want to check your credit report for free first and take a look at any and all derogatory marks and issues that are causing a poor score Then, you can start to work towards rebuilding your credit.

Check Your Credit Score

As mentioned, the first step towards rebuilding or building your credit is to check your credit score. There are three major credit reporting agencies that compile financial information to come up with their own scores. You can access one free credit report a year via Equifax, Experian, and TransUnion.

However, if you want to check your own credit score more often, we’d advise doing so via a third-party app such as Mint or Float. These kinds of financial apps will allow you to see an updated credit score more often without any penalties. And, they’ll provide you with a lot more tools you need to stay on top of your finances, such as tools that help with paying bills on time and budgeting your expenses.

What to Know About Derogatory Marks on Credit Report

After checking your credit score, you’ll be able to view a few different factors, such as your payment history, the accounts you have opened, how long they’ve been open for, and any derogatory marks that are hurting your credit score.

What are derogatory marks on a credit report? They can be:

  • Missed payments
  • Accounts in collection
  • Repossessions
  • Foreclosures
  • Chargeoffs
  • Judgments
  • Bankruptcies
  • Tax liens

Each individual mark can hurt your credit score and make you look less creditworthy. And, these types of negative marks can stay on your credit report for quite some time. Major issues such as bankruptcy can make it hard for you to raise your credit score as they usually stay on your credit report for up to ten years. Other derogatory marks such as missed payments will usually stay on your report for seven years

Different Ways to Build Credit

Take one look at a credit score chart to see whether or not you have an excellent credit score. 21% of Americans actually have a pretty exceptional credit score, which is considered to be anything over 800 (on a scale of about 300-850).

If you don’t have a good credit score then that’s okay. There are ways to either rebuild your credit or simply build credit from scratch. According to Experian, building credit from scratch takes about three to six months of consistent credit activity. This can include:

  • Applying for a secured credit card. Secured cards are great for those with no credit as they’re easy to get approved for. These types of credit cards, however, will still allow you to build credit fast until you’re able to be approved for an unsecured card with a higher credit limit.
  • Taking out and paying off installment loans. Installment loans like student loans are a great way to build your credit as long as you pay them off on time. If you’re having trouble making those payments, speak with your lender about lowering the monthly payment so that you don’t miss a payment.
  • Become an authorized user. If you’re young enough, you can ask your parents or a close family member to add you as an authorized user on their credit card. You’ll be able to take advantage of their credit until you’ve build up enough to get your own credit card.

Paying all debts on time and working towards clearing up any collections or liens owed is a surefire way to build your credit fast.

Earning More to Pay Off Debt

If you have a high debt-to-income ratio then you’ll find that, regardless of how great you are at making payments on-time, it will be hard to build credit and improve your credit score. If that’s the case, try looking for ways to build your savings to pay off debt faster.

And, the Cheese Debit Card can help you do just that. Our FDIC-insured debit card comes with $0 in fees on top of lots of great savings opportunities.  In fact, you can earn a lot of cashback to put towards things like student loans and credit card payments.

Interested in a Cheese debit card? Click here to sign up!

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