In as much as this may sound unpleasant to some, rebuilding your credit score is always within your control. You simply have to make your payments on time and also in full. This way, you can improve your credit score as well as credit report within a short time. Here is what to expect during the entire credit repairing or rather rehabilitation process.
Recovery time: It is hard to say with certainty the time it can take for one to repair his or her credit score, especially if it was in a real mess. According to FICO which is currently the leading as well as the most popular credit scoring firm, it may take 7 to as much as 10 years for one to repair his or her credit. Here is an overview of how long different financial issues remain as part of one’s credit report:
- Unpaid tax liens: no specific expiration date
- Chapter 7 bankruptcy: 10 years
- Chapter 13 bankruptcy: 7 years
- Public Record: Approximately 7 years
- Collections: Approximately 7 years. This highly depends on the age of debt under collection
- Foreclosures: 7 years
- Late payments: 7 years
Improving your credit score
Your credit score is nothing but a numerical value describing how well you have handled your credit. If you have missed payments, gone through bankruptcy or defaulted loans, your credit score will drastically go down. However, there is some good news. You can always start all over again to repair the unimpressive credit scores immediately by engaging in some financially healthy behavior and habits. For instance, the unimpressive credit card scores can start improving as soon as your bankruptcy issue is discharged or if you always clear your mortgage on time. In the long run, this will have a significant impact in your bid to repair your credit credit report.
Quick fix for one-time slipups
Late bill and loan payments often reduce credit scores. However, you should get back on track within one to two months to be on the safer side as your credit score can bounce back quickly. Keep in mind that you should not allow your payments to go past the 90 day overdue mark. If you allow it to happen, it will damage your credit score for two good years. Be smart when trying to avoid such scenarios. Use the fee automatic bill pans and alert features available with online banking. It will come help you to also make on time payments.
You can also embark on a long term strategy to build your score, especially if it is too low to qualify for a traditional credit card. Use a secured card where you will have to deposit money in a security deposit account. The money will then be used as collateral for your credit card. Alternatively, you can choose to diversify your credit report. This can be done by applying for a credit, loan or line. It will allow you to save for larger credit card purchases that you can pay off your credit card debt and bills on time and in full.
It may be disheartening but there is no magic bullet that a 600 FICO credit score can use to skyrocket to 750. Keep in mind that the FICO score ranges from 300-859. Any score above the 720 mark is considered as excellent. If you have been declared bankrupt, it can take years to bring back your score to healthy level financially, but typically it takes just months with bankruptcy issues.