GMR 175: How Long Does it Take to Build or Improve Your Credit Score?

Everyone will have to or want to borrow at some point. Having the best credit score will not only allow you to get that loan or credit account, but it will also ensure you pay the lowest interest rate available. In this episode of Getting Money Right, we discuss how long it will take you to build or rebuild your credit score if you’ve had some negative marks against your score, so you can pay less when it’s time to borrow.

Show Notes

How Long Does it Take to Build Credit or Improve Your Credit Score?

• From Zero - will take time, perhaps 3 to 5 years. You have to prove you can handle credit responsibly.

  • Take out a small loan for a car or furniture and pay it off early.

  • Open a credit card that you pay off each month.

  • Use credit wisely. No big purchases! Think - what would a creditor think if I buy this item on credit?

• From Fair to Excellent - a few months to a couple of years depending on how quickly you can pay down your debt (get credit utilization under 30%).

• The best way to improve your rate hasn’t changed much.

  • Pay on time and pay more than the minimum payment

  • Keep credit use under 30% - to maintain an excellent score keep it at 15-20% max.

  • Increase your credit score by increasing your history of credit used.

  • Don’t be in a hurry to close credit cards that you’ve had a long time because they don’t pay as much as the new bonus cards.

  • Limit accounts to 5 or 7 max open at any time.

• Credit Karma - app to help you understand and track your credit score.

  • Only two of the 3 bureaus are part of CK (Transunion and Equifax). Experian is not included.

  • Provides education and advice based on your credit use

  • CK only tracks the information provided by the Credit Bureaus.

  • Typically the more debt you have the lower your score. The less credit available the less likely you are to get into trouble.

  • Small swings in the credit scores is normal if you use Credit Cards, even if you pay them off each month.

  • CK pulls the information about every 5-7 days, and depending on what you charged or paid off, the score will fluctuate.

Resources

Budgeting tools and other free resources - https://leosabo.com/resources
David’s website - www.stewardshippastors.com