How Long Does It Take For A Credit Card To Build Your Credit?

How Long Does It Take For A Credit Card To Build Your Credit?

January 12, 2016         Written By Jason Steele

When you are trying to build your credit score, it can seem to take forever. The best way to increase your credit is often by using credit cards in a responsible manner. It would be nice if these cards allowed you to build your credit instantly, or at least in a few days or weeks. But since it took some time to damage your credit, it will also take time to rebuild it, even when using a credit card.

How long should you expect

As the saying goes, when you find yourself in a hole, your first action should be to stop digging. So the amount of time it takes you to build your credit will be based on the moment you have made all of your payments to all of your creditors on time. Only then will you begin the process of rebuilding your credit.

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Another extremely important factor in improving your credit is lowering your level of debt. Next to making on-time payments, the amount of money you owe is the most important factor in your credit score. So it is important to pay off as many outstanding balances as possible in order to improve your credit score. Even if you can’t pay off a balance in full, paying off a significant portion of it can help your score

From there, your credit can improve quickly, provided you carry very little debt and make 100% of your payments on-time. After just a few months of on-time payments, most credit card users will see a significant, if not dramatic, jump in their credit scores. For example, many credit card issuers will offer new cardholders an increased line of credit after just five months of on-time payments. For those with poor credit, it can take a year of on-time payments in order to move to a credit score considered to be fair. Likewise, it can take at least a year to move from fair to good, or from good to excellent.

Building credit from scratch

Some people have a low credit score because they have a limited credit history. These people include young adults, recent immigrants, and those who have avoided credit in the past for some reason. In these cases, their low credit score is more the result of having few open accounts then from having a poor payment history. For these credit card holders, it can make sense to open multiple new accounts, so long as each one is managed responsibly. By making on-time payments on multiple accounts, those who are new to credit can significantly improve their scores within a year.

Types of credit cards that can build your credit

Just about any credit card can help people to build their credit. For example, secured credit cards require the payment of a refundable security deposit before an account can be opened, yet these card issuers will still report customers payment histories to the three major consumer credit bureaus.

On the other hand, debit cards, prepaid cards, and ATM/check cards are not considered to be a line of credit and their use will have no effect on cardholder’s credit score, no matter how they are used.

Important tips to using credit cards to build credit

It is impossible to overstate the importance of making each month’s payment on-time, as payment history is the most important factor in your credit score. It is also vital that the payment be of at least the minimum amount, otherwise it’s not considered to be on-time.

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To help make payments on-time, you can use the email and text alerts that most credit card issuers offer. In addition, most credit cards offer some form of automatic electronic payments that ensure payment is received on time. Furthermore, most banks also offer electronic payments. Any form of electronic payment will be faster and more reliable than mailing a check to your card issuer.

Another step to build your credit through credit card use is to become an authorized user on another person’s credit card account. So long as the primary cardholder has excellent credit, being an authorized user will help increase your credit score.

Finally, you should take advantage of your credit card’s credit tracking benefits. While cardholders used to have to pay extra for credit monitoring services, some card issuers now offer their customers a free credit score every month. By using this benefit, you can follow your progress every month as your score improves. This is also a great way to be alerted to any problems with your credit before they become severe. In addition, these credit tracking services can offer customized advice on how to improve your credit score.

Like many powerful tools, credit cards can be dangerous when used incorrectly, but very helpful when used properly. By using your credit cards responsibly, you can improve your credit score more rapidly than you may have thought possible.

The information contained within this article was accurate as of January 12, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Jason Steele

Jason Steele is a journalist that covers credit cards, travel and consumer credit. As one of the nation's leading experts in credit cards, Jason has contributed to dozens of travel and personal finance outlets including NerdWallet, Credit Karma and the Points Guy, where he serves as the Senior Points and Miles Contributor. Jason has also been widely quoted in mainstream media in outlets such as the Washington Post, the USA Today and Bloomberg Business Week. Jason is also the founder and producer of CardCon, which is the annual Conference for Credit and Credit Card Media.
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