Small Business Advice Uncategorized

Life After 30: How Long Does It Take to Fix a Credit Score?

The average credit score across the UK is 767, with Londoners leading the way at 871. It’s not unusual to have bad credit or no credit by the time you hit your 30s. What matters most is learning from mistakes and setting yourself up for building credit. 

To build credit fast, you need a strong foundation. That could look like erasing old debts or utilizing auto-bill payments. The question of how long does it take to fix credit is going to vary by situation.

What’s important is to follow key credit-building habits. Here’s how to get started. 

How Long Does It Take to Fix Credit Errors?

For those of you who have already started checking your credit reports, you may notice discrepancies. These might consist of old bills that you forgot you had or bills that you’ve already paid. Getting these errors removed from your report is a huge first step to building credit.

You need to contact the credit reporting agency and dispute these bills directly. If you can prove that you already paid these bills, they will erase them and boost your rating immediately.

Never Miss a Payment

Rule number one to build credit fast: never miss a credit card payment. On-time payments account for 35% of your score. Late or missed payments hurt for a long time. Your best bet is to force yourself into on-time payments by enrolling into auto-payments with your credit card.

You can use services, such as a CreditLadder, to manage all your rent and utilities. If had a few years of inconsistent payment history, it’s not the end of the world. You can make up for lost time by paying all your bills on time and eventually the past history will “fall off” your report.

If you currently struggle with your payments, you should reach out to a credit counselor. They will work with you to help consolidate debt and lower your monthly payments.

Reducing Overall Debt

Your total debt makes up another third of your credit score calculation. Obviously, if you had the money now, you’d pay it all off at once. As we mentioned previously, a credit or debt counselor may have options for you. 

Consolidating loans or rearranging your payments could make a huge difference. For example, there are payday loans online that could give you the ability to pay off bills altogether and focus on paying off your debts. All of this will require financial discipline, so you’re not plugging old holes and making new ones.

Also, refrain from closing old credit cards that you don’t use. Closing accounts, even in good standing, will probably affect your score negatively.

Credit Utilization

How much credit you’re borrowing on a monthly basis also affects your score. If you’re borrowing your max limit, but paying it off at the end of the month, you’re going to get dinged. Creditors want you to actively use your credit, but not all of it.

The general rule of thumb is to use under 30% on any given card. Going back to your unused cards, you can use them to build credit with little investment. Put your Netflix subscription on it and place it on auto-bill pay. 

If you do find yourself needing to use a lot of your credit, you can avoid getting punished by making multiple payments. Pay some of it off before your monthly statement and you should avoid high utilization penalties.

Small Loans That Build Credit

Another alternative way to build credit faster is to take out microloans called “credit-builder” loans. These loans serve only one purpose: to build credit. That means you can’t use the money for anything else.

You take out the loan, it sits in an escrow account, and you pay it all back in monthly payments. The good news is that you’re only charged a small fee for borrowing, rather than compounding interest. These loans are small, yet effective.

All your payments get reported to credit bureaus, which adds to your payments history. Credit-building loans can also work with your own money upfront. Some financial institutions will accept your money as a deposit towards the loan, which is great for people with bad or no credit history.

Remember, this is only recommended if you have a solid income and don’t run any risk of missing payments. Missed payments on credit-builder loans hurt the same as any other loan or credit card.

Refrain From Opening Too Many Accounts

Our final piece of advice for anyone trying to build credit is to plan which cards you take out. As you build your credit rating, you’ll get new offers with greater credit limits. If you’re accepting the first offer that comes in the mail, you could shoot yourself in the foot.

Opening up too many accounts in succession can knock you down 10-20 points. These are considered “hard inquiries” on your credit report. You want to stay under four new cards in a two-year span.

So, if you already have a new card, wait a while before choosing a second one. The same goes for applying for auto loans and home loans. Each check on your credit is a hard inquiry. 

Think Long-Term

We know how difficult it can be to build credit sometimes. It’s important to stay realistic and not rush into things. Never take out debt to pay off debt, unless you end up with lower interest rates.

Work to correct past missteps and establish a positive track record. If you’re trying to get a new car or house in the near future, it is possible to build credit fast. Visit your local financial institution and ask them how long does it take to fix your credit history.

They can provide a unique insight into various collections practices and legal strategies. Monitor your credit score and your accounts daily. If you own a business, research financial strategies, and business case studies today. 

You’re not the only 30-something who has asked how long does it take to fix credit. Use the resources provided on this website to get ahead and stay ahead. 

Adam Torkildson
Adam is a content marketer, gym rat, husband, father and entrepreneur.

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