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How Long Does It Take to Build Your Credit Score?

If you have a high credit score, you may enjoy better financial opportunities. How long this might take depends on your starting point. Whether you’re recovering from bankruptcy or already enjoy good financial health, there are some good ways to help build credit faster.


Below, we’ll explain the factors that build your credit score so you can create a strategy that may help you increase your credit score in the next few years.

November 19, 2020 in Learn

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What is credit history, and how long does it take to build your credit score?

Your credit history is like a financial report card. Your credit activity is reported regularly to Canada’s two credit bureaus, Equifax and TransUnion, and becomes part of your credit report.


When you apply for credit, lenders look at your credit report to evaluate your creditworthiness and make a decision. They can see how much money you’ve borrowed, what types of debt you have, and how you’re paying it off. They can also see if you pay bills on time and whether you can manage debt responsibly.


Credit reports mostly focus on your past few years of credit behavior, where missed or late payments will roll-off with time. Given that, if you want to make significant strides in building or improving your credit score, you will need at least a few years of positive payment history, where there are no missing or late payments.

How to build your credit score if you are starting from scratch

If you are just starting to build your credit history, you could team up with someone with a good credit score who is willing to cosign a loan with you.

How to build your credit score if you have a poor credit score

If you have a poor credit score, it’s important to understand how you got there. Get a copy of your credit report and analyze your spending patterns. You can then determine where to focus on to help build credit faster.

If you find you’re spending more than you earn, you could cut your expenses, boost your income, or re-examine your budget. If you keep missing paying bills, you could try automating your bill payments. Too many hard credit inquiries on your report? Wait a period of time before applying for new credit.

If your credit utilization ratio (the total amount of your outstanding credit balances divided by the total amount of your credit limits) is high, you will want to work on paying down your debt to lower it.

How to build your credit score if you have filed for bankruptcy or defaulted on a loan

If you’ve filed for bankruptcy, it could remain on your credit report for six to seven years (depending on your province or territory). If you work on boosting your savings and showing a positive history in the meantime, you can work towards repairing your credit.

Begin your credit-building behaviors

There are several types of products that can help you build your credit history. Consider the following four options:

Get a credit card

A credit card can be a great tool for building up credit. Every time you pay off your monthly balance, it is reported to the credit bureau and becomes part of your positive credit history.

Get an installment loan

Showing that you’re able to manage different types of credit products can help bring up your score quickly. To do this, consider applying for an installment loan. If you can demonstrate a history of on-time monthly payments and a diversity of credit on your file, this could make you appear more creditworthy.

One example of this is American Express® Personal Loans, which is available to pre-approved Cardmembers only. If approved, you could receive the funds directly in your bank account within 1-3 business days. You would then follow a set payment schedule with predetermined monthly payments.

Improve your credit utilization ratio

Creditors ideally want to see that you don’t overextend the credit limits provided to you. Totaling up your existing credit balances and dividing them by your total credit limits provides your credit utilization ratio: a key metric when evaluating your credit health. You can strengthen this ratio by paying down your existing debt or by increasing your credit lines (through a credit limit increase or by opening up a new credit account), which may be difficult if you already have bad credit. Opening a new account should be approached cautiously as it results in a new credit inquiry on your credit file and can affect your score negatively.

How to maintain the credit score you built

Consider the following four strategies that can help you maintain a high score in the long-term

Create a realistic budget

Putting together a realistic budget could help you create healthier financial habits and become a more mindful spender. Spending and saving every dollar with intention might also help you keep better track of your bills and when to pay them. All these factors can help contribute to a higher credit score.

Pay your balances on time

When you get your credit card statement, you can choose to pay off the entire balance in full or just the minimum monthly payment. Whatever amount you choose, make sure to pay by the payment due date on your statement each month. Making this a habit can boost your credit score over time.

Increase your credit limit

One way to possibly build your credit is to apply for a higher credit limit on your existing cards or apply for a new card.

If you do get approved for a credit limit increase, that doesn’t mean you should use the he available credit: having access to extra funds but not actually spending them can help you appear more creditworthy to lenders. Increasing your credit limit compared to what you use can result in a lower credit utilization ratio.

Getting a new card will increase your available credit limit but be wary of applying for multiple cards at once as that could also impact your credit score.

Reduce your debt

Paying down your debt can improve your credit utilization ratio. Using the snowball or avalanche methods of debt reduction can help.

The snowball method has you dedicate all your available cash towards paying down the debt of your smallest card balance, then moving that payment amount to the next-smallest balance when the first card hits zero.

The avalanche method dedicates your debt reduction efforts to your highest APR card. Once your highest-APR card is paid off, move the same budget to pay off the next-highest APR.

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