Fixing your credit can be accomplished quickly – over a matter of a few weeks for small hiccups. For larger credit drops, credit recovery could take a longer time – months or even years. How fast you can raise your credit score really depends on where your credit starts.
Your Credit History Matters in Raising Your Credit Score
It's quicker to build credit if you're starting from scratch without much of a credit history. But, if you're trying to rebuild your credit, the process of getting back to where you started from can take much longer.
The good news if you're already dealing with bad credit is that new, risky credit behaviors and missteps don't hurt your score as much as they would for someone with better credit. It's also a quicker recovery process when you're starting out with a lower score. You should always strive for the best credit possible, but once you have a score of 700 or above, negative actions have a far greater impact.
According to myFICO, the credit score drop for the same negative actions have different results for people with different credit scores. Let's look at an example of how two people are affected, one with a credit score of 680, and one with a score of 780:
| 680 | 780 | 680 | 780 | 680 | 780 | |
| Adverse Action | Maxed Out Credit Card | Maxed Out Credit Card | 30-Day Late Payment | 30-Day Late Payment | Bankruptcy | Bankruptcy |
| Severity Consideration By Lender | Moderate | Moderate | Severe | Severe | Major | Major |
| Point Drop | 10 to 30 | 25 to 45 | 60 to 80 | 90 to 110 | 130 to 150 | 220 to 240 |
| Resulting Score | 650 to 670 | 735 to 755 | 600 to 620 | 670 to 690 | 530 to 550 | 540 to 560 |
| Average Recovery Time | 3 Months | 3 Months | 18 Months | 18 Months | 5 Years | 7 to 10 Years |
As you can see, lenders view different actions with progressing levels of negativity. The more negative the action, the more it affects your credit score. From this chart, you can also see that the higher the initial credit score, the greater the drop in points.
How Long Does it Take to Clear a Bad Credit History?
Though certain actions have average recovery times when it comes to credit building, the time it takes for you to rebuild your credit depends not only on your starting credit score, but also on how you handle credit on a regular basis.
One misstep is easier to come back from than a long-standing habit of late payments. The good news is that credit can always be improved if you work at it. Something as simple as going over your credit reports and disputing incorrect information or errors can raise your credit within a month. You can also catch up on past due accounts, pay off collections, or pay down credit card debt for some quick fixes.
For a more long-term solution to building your credit, you need to create habits that add positive information to your credit reports. This means paying all your bills on time, and keeping your overall credit utilization ratio below 30 percent. You can bring your score up even further by adding an additional line of credit and paying it off each month.
Of course, getting from bad credit to good credit isn't an overnight – or even a few-month – process. If you're starting out with a low credit score (below 600) and hope to push your credit beyond the 700 mark, practicing responsible spending and bill paying habits over the course of several years is the best bet.
Let CarsDirect Help Get You on Track
Another great way to improve your credit is with an auto loan. Making on-time payments each month helps add to your payment history, which is the largest factor in determining your credit score. A car loan can also add an additional line of installment credit to your history, which helps diversify your profile, all while getting the vehicle you need.
Don't worry about credit standing in your way. Here at CarsDirect, we work with a nationwide network of special finance dealers that have the lending resources available to help people with many types of credit scores get financed. Just fill out our no-obligation auto loan request form to get the process of being matched with a local dealership started right now!
