About six months of timely payments should be enough to help you get a decent credit score. Your payment history is the most important factor when it comes to your FICO score, representing 35% of it. To improve your score in such a short period of time, it is essential that you don't make any late payments. The amount of debt you have is almost as important as your payment history, representing 30% of your FICO score.
The good news is that this is probably the easiest way to improve your score in a short period of time. Keeping your cards open, even if you don't plan to use them, has two main benefits for your credit. Firstly, it keeps your total credit limit higher, making it easier for you to use only 10% of that total. Secondly, 15% of your FICO score is based on the length of your credit history.
If you close an account that you've had for a while, you lose that history. Keeping your lines of credit open for the next 6 months will allow you to have a credit history 6 months longer than before, but don't close any old accounts during that time. New credit only represents 10% of your FICO score, but credit inquiries immediately lower your score by 5 or 10 points. If you're trying to improve your credit score, the last thing you'll want to do is apply for new credit. Remember that this is only affected by “difficult” inquiries that actually affect your credit.
You can check your own credit score as often as you want without any negative consequences. Ideally, creditors would like to know that you have a good track record of managing both types of debts, but you don't want to open new credit accounts or loans to “fix this problem”. Getting credit for the first time usually takes at least six months, but getting good credit can take even longer. As you work toward your goal of building a strong credit profile, practice responsible credit habits and be patient. To get a credit score from scratch, you must first use credit, such as opening and using a credit card or paying off a loan. It will take about six months of credit activity to establish sufficient history to obtain a FICO credit score, which is used in 90% of credit decisions.
FICO credit scores range from 300 to 850, and a score above 700 is considered a good credit score. Scores above 800 are considered excellent. But to borrow money, you have to have some credit. It seems like a dead end, right? Never buy more than you can afford each month. If you don't have a lot of money in your bank account, buy something small every month (a Netflix subscription, a tank of gas, or a pack of gum).
The last thing you want to do is borrow with credit cards, which will cost you more than 15% in interest and ruin your credit rating. Student credit cards are great tools for college students and recent graduates. They are specifically designed for young people with limited credit history. The Discover Open Road card for students (not an affiliate link) offers you a 1% cash refund on your daily expenses and doubles up to 2% on gas and restaurants. To ensure that your credit card bill is paid every month, set up automatic payments through the credit card website. Another way to fill up your reduced credit history and accumulate credit faster is to be added as an authorized user to someone else's account.
And having a small personal loan, in addition to a credit card, can be an effective way to build.