How long will it take to go from no credit to good credit?
Building good credit can take longer than you think, so start early and use your credit wisely.
Building good credit can take longer than you think, so start early and use your credit wisely.
When you have no credit, working your way up to a聽good credit score聽can make you feel like an impatient child on a long road trip, asking, 鈥淎re we there yet?鈥� The difficult thing about credit scores is that they take a long time to build up but mere seconds to ruin.
If you start with zero credit and get a loan or a credit card, you鈥檒l have a credit history but not a聽FICO score. This can make it tough to qualify for聽good-credit credit cards. After six months of having a line of credit, you鈥檒l have a FICO score, but聽it won鈥檛 be a perfect 850. If you make all your payments on time and borrow wisely, though, you could have a score over 700. (It won鈥檛 take as long to generate a credit score from聽VantageScore, FICO鈥檚 competitor.)
If you鈥檙e having trouble qualifying for a loan or credit card, a聽credit-builder loan聽or聽secured credit card聽might help you get a foot in the credit door.
What can I do to improve my score right now?
Here are some ways you can give a聽limited credit history a boost:
Inherit your parents鈥� good credit.聽If your parents have good credit and one of their cards reports authorized user activity to the three major credit bureaus, ask if they鈥檒l add you as an authorized user. If they do, it may聽help diversify the types of credit on your report and聽improve your score.
Learn what counts.聽If you just got a credit card, take the time to learn how credit scores are calculated so you won鈥檛 make a rookie mistake, like forgetting to make a payment or hitting your limit.
Keep up the good work.聽Unlike bankruptcies and聽late payments, a good credit history stays on your credit report forever, as long as the accounts stay open. Make sure you鈥檙e putting your best foot forward, even when no one鈥檚 pulling聽your score.
Age matters for credit scores
There鈥檚 one thing that all borrowers with great credit聽scores have in common and younger borrowers lack: age.
Among the 0.2% of credit card users who have an 850 credit score, the average age was 61, according to a聽2011 report聽by SubscriberWise, a risk management firm. These elite borrowers had credit card files that were 30 years old, on average.
If you just got your first credit card, you鈥檙e not going to have a score over 800, no matter how hard you try. Instead of getting frustrated, make聽building your credit聽a long-term goal.
Keep accounts open 鈥� even ones you don鈥檛 use that often 鈥� so lenders can see your good borrowing behavior over time. Pay your bills punctually. Use less than聽30% of your credit limit. By starting all these good credit habits early, your credit score will improve down the road.
This article first appeared at NerdWallet.