Having a low credit score can be discouraging, but the good news is that when your score is low, every positive change you make is likely to have a significant impact. It's possible to go from a poor credit score of around 500 to a fair credit score (in the range of 580 to 669) in 12 to 18 months with responsible credit use. Credit reporting agencies calculate your total score using five areas and credit utilization rates. The worst credit scenario is to put the creation of excellent credit on hold before starting or expanding a business.
How long it actually takes depends on your current credit score and your credit goal. This means that six months of credit activity is enough for agencies to get a good idea of the type of credit user you are. Receiving a lot of solid credit inquiries can also affect your score, so be sure to take advantage of flexible credit checks or maintain any loan application within 30 days. One of the best ways to build credit is to use a credit card and then pay the balance monthly.
If you don't have a credit history, it can take a few months to a year of using credit responsibly before you start to see results. Credit rating models generally analyze your credit history over an extended period of time, so it's important to be patient and consistent with your payments. If you've never had any type of credit, there are several ways you can start building a credit history. Creating a credit score from scratch can take anywhere from one month to six months, depending on the type of credit score you're looking for.
There will be no financial records or just a small credit file for credit bureaus to calculate a score. While creating a credit score from scratch is (relatively) quick, improving your current credit may take longer.Payment history is the most important factor in determining your credit score, so if you've always made your payments on time, you're likely to start with a good credit score. To build your score from 500 to 800 in 12-18 months, focus on making all payments on time and keeping your debt utilization rate low.