By Allan Halcrow | American Express Credit Intel Freelance Contributor
6 Min Read | December 22, 2020 in Credit Score
Having good credit means having a good credit history.
History isn’t instant. If you haven’t used credit before, it usually takes at least six months to generate a credit score – and longer to earn a good or excellent score.
It’s usually easier and faster to establish your first credit score than to repair one, so use those first six months to develop responsible credit habits that can set you up for long-term financial success.
Are you starting college and ready to begin building credit in your own name? A newcomer to the country who wants to establish credit in the U.S.? Looking to kick-start your credit profile after not using any debt for six months or longer? Whatever your reason for wondering how long it takes to get a credit score, you can generally expect it to take about six months – and usually longer to get into the good-to-exceptional credit score range.
The better you understand how credit scores are calculated and used, the more evident it becomes why it takes six months. Lenders use your credit score to help them decide whether to lend you money. Specifically, credit scores are designed to indicate how likely it is that a borrower will fall at least 90 days behind on payments over the next two years. So lenders want to see more than a couple months of on-time payments – they want you to show that you can sustain that excellence.
Let’s explore how you can build good credit effectively while developing credit habits that help sustain high scores for the long run. Keep in mind that even if building a good credit score takes a while, it’s usually faster and easier than rebuilding a score after a mistake.
Once you understand the principles behind credit score calculations, you can begin working toward a good credit score with greater confidence. Although there are many credit scoring models, the two leaders are FICO and VantageScore, both of which issue scores ranging from 300 to 850. Scores above 670 are considered good to exceptional in the FICO model, which is more widely used by lenders.
The algorithms for calculating your credit score are considered trade secrets. FICO shares the following general guidelines:
Some of the best ways to build a good credit score are to pay your bills on time, keep your utilization low, and focus your efforts on a small and balanced portfolio of different types of debt.
Although you probably can’t cut the time it takes to get your first credit score to less than six months, focusing on the behaviors that lenders want to see can help you get to a good or excellent score sooner than you might otherwise.
To get a good or better score:
And try to avoid:
Just as you can’t earn a grade without enrolling in a class, you can’t establish a credit profile without borrowing money. If you’re starting from scratch, you have several options:
It usually takes a minimum of six months to generate your first credit score. Establishing good or excellent credit takes longer. If you follow the tips above for building good credit and avoid the potential pitfalls, your score should continue to improve. You can get the greatest value from your initial credit-building period by applying for credit wisely, paying your bills on time, and keeping your balances as low as possible.