It takes time to rebuild your credit. The good news is that you have many options to get you back on track. They can range from requesting a higher limit today to waiting it out for years. Best of all, each credit rebuilding technique comes with unique benefits as well as its own timetable. Let’s distinguish these credit rebuilding methods from each other in terms of how long they may take on average and which may make sense for you.
Reasons someone may need to rebuild credit
There are several reasons you might want to know how to fix your credit. Your credit may undergo fraud, technical errors or setbacks. No matter what the cause, you can take action to rebuild your credit over time. Looking at the possible reasons behind your credit setbacks can be a good place to start:
- Setbacks such as late payments can contribute to faltering credit. That’s because the credit scoring companies often count your payment history as a large percentage when calculating credit score. For instance, VantageScore® gives payment history a 40% value among the five factors in their credit scoring algorithm.
- Consumer fraud claims can also account for some credit report flaws. Credit cards were most frequently reported as the payment method for fraudulent transactions in the nearly 2.8 million fraud reports of 2021.
- Multiple applications for credit within a certain timeframe may also lower your score. These specifics can differ as far as how many applications and within how long. But it’s best to keep in mind that many credit applications in a row may have a negative effect on your credit score.
- The amount of available credit in your accounts also factors into your credit score. This aspect of credit usage is called credit utilization. It measures how much credit you have accessible in each of your accounts versus how much of it you use. Lenders tend to look for low credit usage as a positive sign. Whereas high usage can typically lower your credit score.
How to rebuild credit
You may want to keep your timeline in mind when deciding how you want to rebuild your credit. Your part in the credit rebuilding process may take a little time, such as requesting a higher limit on a credit account or paying down balances. Some aspects of rebuilding can take years. For instance, in the case of bankruptcy, it can take 7-10 years for the filing to fall off your credit report.
Check your credit
Checking your credit score can help to kick off a smart credit rebuilding plan. Services such as Chase Credit Journey® offer a free credit score check that doesn’t harm your credit score. After signing up for the service, whether in the Chase Mobile® app or online, you can find out your score and revisit it as often as you like to see how your progress makes a difference. Of course, some changes can take a bit of time to propagate. So, there’s no need to check constantly. In fact, you can set it up to receive email alerts when important changes occur and to receive a monthly summary.
Correct credit report errors
You can file disputes for errors in your credit report rather quickly to help rebuild your credit. In cases of identity theft, for example, there may be errors marring your credit history as a result of fraudulent activity in your name. Filing disputes for these can take as little as a day if you've collected the required documentation.
As a next step, you can contact the three major credit bureaus: Experian™, Equifax® and TransUnion®. You can file each dispute by postal mail or on their websites. You may want to follow up to make sure your forms are received. That’s why many filers choose to send their materials by certified return receipt.
Pay bills on time
A consistent course of paying your bills on schedule can work well for rebuilding credit. This technique also may take some time to make a difference depending on your starting point. If you have a lot of recovery to do, it may take a bit longer than if your credit’s only a bit sullied or at the beginner stage. No matter how many bills you’ve got to pay or how much catch up you need to play, there are tools to help.
Manage your credit utilization ratio
Requesting a higher limit from your lender can improve your credit utilization ratio. It may take time for the lender to get back to you about their decision after applying for a higher credit limit. While you’re waiting, there are other steps you can take to manage your credit utilization, like paying down your credit accounts. This only works if you also lower your spending rate so that you’re paying off more than you expend. Practicing this consistently can help boost your credit utilization ratio but requesting a higher limit can also result in a hard inquiry. If that request is declined, that may further result in an adverse action letter. If possible, focus on building healthy habits early on.
Get a secured credit card
If you find that you need to rebuild credit due to maxed out cards or too few accounts, it may help to apply for a secured credit card. A secured card can help you improve your credit score because it works much like a loan based on collateral. In this case, you get a credit card thanks to a security deposit you pay ahead of time. You then use the card as you would any other credit card and make payments on the agreed upon schedule. This consistent action can help you build a better credit history.
No matter how fast or slow your credit rebuilding process, there’s no true end point. That’s why maintenance matters when it comes to credit. Thanks to tools such as Chase Credit Journey® there’s help for monitoring, rebuilding and maintaining strong credit going forward. For example, if you sign up for credit monitoring, this service can alert you of changes to your credit report and score with notifications. These updates could help you maintain best practices by raising your awareness and keeping you apace with your credit account activity with identity monitoring as well.
How long does it take to rebuild credit? The answer varies. When you consider the circumstances that diminished your credit and find a suitable way to rebuild, it can help you get on a timeline. Whether you request a higher limit to a card or start a consistent payment schedule, using a tool like Chase Credit Journey® for credit monitoring may give you the motivation you need to get started.