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Last updated on 31st of August 2021

How Long Does It Take To Build Credit?

It takes time to build up a good credit score, and if your credit history is looking less than perfect or if you've just started on your credit journey, you may be asking, "how long does it take to build credit?"

It takes time to build up a good credit score, and if your credit history is looking less than perfect or if you've just started on your credit journey, you may be asking, "how long does it take to build credit?"

To keep building good credit, you'll need to put in some dedication and effort, which won't happen overnight. If you've only just started, you'll need to have an account that is open and active for at least three to six months before your credit score can be worked out. However, if you adopt the right strategies, you can eventually build up a credit history that can raise your credit score more quickly than you imagined.

Once you've established a positive credit history, you can continue building a good credit score that will be valued by lenders, and that will set you in good stead for approval for any credit card, loan or mortgage you apply for.

So, how can you build your credit from scratch, and how long does it take to reach a credit score that you can be proud of? Here, we take a look at top tips and tricks and give you some financial advice for building your credit file starting from scratch in this quick five-minute read.

How is my credit score calculated?

Your credit score is the term given to how risky you are perceived to be by lenders when you apply for a loan, credit card or other form of credit. Essentially, they use it to work out whether you're too much of a risk to lend money to because you may not be able to meet your regular payments.

Credit scores are numbers calculated by using the information appearing on your credit file to determine the likelihood of you repaying debts on time. This means that your credit score will always be based on your previous payment history and financial health. The idea centres around the concept that suggests your financial actions during the past can predict how you'll behave around money in the future.

There are several credit scoring models in use, and lenders all use different ones. This makes it very difficult to determine whether you have a good credit score or a poor one.

When you apply for any new credit, such as a loan or credit card, the card issuer or lender will go to one of the three major credit bureaus (Experian, Equifax or TransUnion) to see what type of credit score you have. If you're fortunate enough to have an excellent credit score, that's good news for you as you'll almost certainly be reviewed, approved and accepted for your chosen line of credit.

However, if your personal finance hasn't always been handled in the best possible way, you could find that the credit report they see doesn't paint you in a good light. This could lead to you being offered a lower credit limit, a higher interest rate, or even being rejected for the credit card or loan you applied for entirely. 

Different credit bureaus and different lenders will give more weight to specific criteria. But, in general, the same rules will usually apply: You'll have a higher score (which means good credit) if you regularly pay off the debts you owe on credit cards and loans and always pay your bills on time. 

If you can keep your revolving balances below your available credit limit and make regular payments, this will give you a better credit utilization ratio which, in turn, will improve your credit rating. Having different types of debt will also benefit you as long as you manage each account properly.

You can't control the scoring model that lenders choose to use. However, you can control your financial habits and make sure that you establish and keep your credit score at a good level.

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What will affect your credit history?

Before we look at what impacts on your credit score, you must first know what doesn't impact it. Your income and employment status, for example, aren't a factor, and neither is your race, gender, age, where you're living and other types of identifying personal information.

Rather, what a credit score calculates is your credit history - how well you've handled your financial dealings over recent years.

Although some people think that the best way to have a good credit score is to never have a credit card or take out a loan, in fact, that's not the case at all. To build good credit scores, you need to open credit accounts like credit cards and loans and use them wisely.

Your credit score takes information such as how long your credit card account has been operating and your credit card's payment history (specifically whether you always pay your bills and make on time credit payments) when calculating your score. They'll also look at how many credit cards you have and what your credit utilization ratio (or the amount of available credit you have left on your account) is.

When it comes to loans, the credit scoring model will look at the loan's age, how much the loan was originally for, whether you've missed payments or failed to pay your bills on time, and the balance you have remaining on your loan.

You can't expect to have good credit if a check of your credit history with the three main credit bureaus reveals that you rarely make payments on time, use credit up to your maximum limit, apply for new credit cards too frequently, and fail to manage your accounts wisely. 

Using too much of your available credit (i.e. more than 25-30%)  will certainly register negatively on your credit report. At the same time, a large number of hard inquiries on your credit report over too short a period of time will also reduce your score.

I don't have a credit score. Is it because I don't have a credit card?

For those who are new to credit, avoiding getting into debt sounds like a good idea. However, your length of credit history is very important when you have to build your credit score up. If you've never used any lines of credit before and never incurred any debt, you can't build credit history for yourself. 

While this helps prevent you from the problem of persistent debt, it also makes you an unknown entity to lenders as they have no clue what sort of borrower you are and whether you're likely to make on time payments. As a result, they'll inevitably view you as a risk when they make a hard inquiry into your credit report and realise that there's no information there to base their scores on.

If information isn't supplied to your file over a sufficient period of time, the chances are that you'll have no score at all. There are several reasons for this. Perhaps you're a young adult who has yet to take out a credit card or loan. Maybe you're a recent immigrant who has yet to build credit in the UK since debts from your home country won't show on your report.

You may have only just opened an account and started making payments. This is a good start, and credit records relating to your payment history will mount up over time. But your scores won't show up until you've been making payments and building your credit profile for a while. Usually, building credit on your accounts to a sufficient point for you to have a credit score on your credit reports could take around six months.

Building good credit also requires you to keep your accounts active. If your account becomes inactive, it could be closed, and this will reduce your score since it could increase your credit usage ratio or shorten your credit age.

How do I get started with building credit from scratch?

It's never too late to start building credit and establish a strong credit history. How long it takes, though, will depend on how effective your strategies are. These options could help you build and establish yourself as a wise and reliable borrower:

  • Consider a secured credit card. This type of card requires you to pay the card issuer a cash deposit, typically equal to the limit of the card. This money is then held separately, so funds are guaranteed, and the lender has virtually no risk. Should you run up debts and make late payments, the lender will keep your deposit. On the other hand, if you always pay on time, you'll usually be given the deposit back.

  • Consider a low limit non secured card. You don't need excellent credit to obtain one of these cards, but they are useful for credit building and require no upfront deposit. On the other hand, their interest rates are high, so do your research well and as often as possible pay the entire balance off at the end of each month.

  • Become an authorized user on another card, such as one belonging to a relative or close friend. Even better, there's no need for an authorized user to even use that card - so long as the card's primary user handles their payments wisely, you'll benefit as an authorized user.

  • Consider a credit builder loan. If you apply for a loan and make on time payments reliably, your report will reflect an improved score. A credit builder loan requires you to deposit funds into an account then you'll be given a loan for the same amount. You then make payment of the amount in instalments over a set term (such as six months). Once it's paid off, you get the deposit back.

  • Add your utility bills and mobile phone contract to your credit record. If you make payment of all your bills at the appropriate time, you'll get a points boost.

  • Apply for more accounts in your name to add more variety to your report, but make sure you always make payment on them on time.

  • Keep your credit usage ratio to under 30% of your limit.

The final word

The time it takes to build your credit score to a good level will vary, but it's clear that the sooner you begin adding information to your record, the more quickly your score will grow. In just six months, you can generate a decent score that will enable you to obtain credit. As you continue to prove your financial responsibility over time, you can be confident your score will rise to an excellent level.