How long will it take to get a
good credit rating?
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If you're wondering how long it will take to get a good credit
rating, use the information below as a guide of sorts that will
tell you how to get you from 'zero to 720', points that is.
First, what is credit rating and how is it determined? The credit
rating scale, though slightly different based on the credit bureau
doing the reporting, gives creditors or lenders an idea of how
credit worthy a person is. The lower the credit score, the higher
of a risk you are. The higher the credit score (anywhere in the
700s is considered to be high), the less of a financial risk you
are based on your credit history.
What determines a good credit score? Having a low debt to credit
ratio along with no or very few derogatory items on your credit
report. That means no late payments, credit denials, and things
of that sort). Depending on what your current debt to credit ratio
is, it can take anywhere from six months to 7 years to bring credit
rating back to good.
Know this - if you have monthly payment obligations from creditors
that report activity to the major credit bureaus, and you make
those payments in a timely fashion, every time you do, you'll
raise your score slightly. Bringing a credit obligation to full
term - meaning completing its term - will garner you more points.
With the above in mind, there are a number of ways that you can
begin to increase your credit rating. One way is to apply for
a secured credit card, which are very easy to get. Basically,
you make a deposit that will serve as your credit limit on the
car, and then you can make purchases using the card, and will
be obligated to paying off the card's balance - with interest
in the future. However, our recommendation to improving your credit
rating is to apply for a secured credit card, but to limit your
purchasing activities. However, make sure to make your monthly
minimum payments in a timely fashion. If you stay on the right
path of making those payments regularly, you'll see that your
credit will improve within a few months provided that you don't
accrue any derogatory items on your report during that time.
So remember, pay all of your bills on time whether those bills
are utilities, car loans, or house payments. If you're able to
pay any of your bills completely, do so. And make sure to keep
your balances low on any credit cards you have. With time and
this kind of effort, you'll build your credit back up.
Another suggestion that we like to make fairly regularly here
is for you to make sure that you inspect your credit report closely.
It's not at all uncommon for errors to exist on a credit report
- something that should have been charged off isn't, or a loan
term that was completed successfully isn't noted as such. Review
your report carefully, and make sure to notify the credit bureaus
if you find any erroneous items on it.
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