How long does it take to build credit?

Back to financial education | Credit & debt, | Credit cards, | Loans

April 5, 2024

4 min read

Your credit score is a number between 300 and 850 that gives businesses an idea of how likely you are to make payments on time. When you have a high credit score, lenders are more likely to approve you for credit, and you may also qualify for lower interest rates. Establishing good credit takes time and persistence. If you’re just beginning to use credit accounts, how long will it take you to build credit? In this article we’ll look at what goes into building a good credit score, and some simple ways to improve your credit.

Here’s what we’re going to cover:

How long does it take to build a credit score for the first time?
What are the ranges of credit scores?
How is my credit score determined?
How long does it take to build better credit?
Oportun: Affordable lending options designed with you in mind

Key takeaways: Building your credit score

Credit scores are rated as poor, fair, good, very good, and exceptional. The average credit score in the United States falls in the “good” range.
It may take about six months to generate your first credit score.
Your credit score is determined by five major factors: your payment history, how much you currently owe, how long you’ve been using credit, new accounts you’ve opened, and what your mix of account types is made up of.
You can improve your credit score by making all your payments on time, keeping your credit balances low, using several types of credit, and leaving old credit accounts open.

How long does it take to build a credit score for the first time?

There is no exact rule for how long it takes to get a credit score. From the time you first open credit accounts, it may take about six months to generate your first credit score.

If you’ve been using credit for less than six months, you may not have a credit score yet. You can check your credit score online through Experian at no charge.

What are the ranges of credit scores?

The credit scoring model most commonly used in the United States is FICO. FICO reviews information submitted by the three major credit bureaus—Equifax, Experian, and TransUnion—and assigns you a score based on your credit activity.

Credit scores range from 300 to 850, with the highest number being the best. Most people’s credit scores fall somewhere in the middle of this range.

FICO rates credit scores like this:

300–579: Poor
580–669: Fair
670–739: Good
740–799: Very good
800–850: Exceptional

How is my credit score determined?

Here are the five major factors that go into your credit score.

Payment history

Your payment history is the most important part of your credit score, counting for 35 percent. It’s a clear indication to lenders of how well you handle credit. If you keep all your credit accounts paid in full and on time, you’re well on the way to building a good credit score.

Amounts owed

The amount of money you currently owe counts for 30 percent of your credit score. Ideally, you want to keep your debt low compared to your income and the amount of credit you have available.

Length of credit history

The length of time you have had credit accounts makes up 15 percent of your credit score. A longer credit history is more favorable for you, because lenders like to see that you’ve handled debt well over a period of years. Leaving old credit accounts open can increase the length of your credit history.

When you first start using credit, of course, you won’t have a long credit history. By managing your debt responsibly, you can build a good credit history over time.

New credit

New credit counts for 10 percent of your credit score. This includes the credit accounts you have recently opened and any hard inquiries made into your credit. Hard inquiries can temporarily lower your credit score by a few points.

Credit mix

Credit mix refers to the different types of credit accounts you have open. It makes up the remaining 10 percent of your credit score. It’s good for your credit to show that you can manage several types of credit accounts—such as a mortgage, a car loan, and a credit card—at the same time.

How long does it take to build better credit?

Once you have a credit score, improving it to the “very good” or “exceptional” range may take months or even years.

By far the best thing you can do for your credit is to pay all your bills on time and in full. This tells lenders that you know how to handle credit responsibly. In addition, it helps to use a variety of credit types and keep your old credit accounts open.

Just as your positive credit behavior can raise your credit score, any negative behavior can lower it. Missed or late payments can continue to affect your credit score for seven years. More serious problems like bankruptcy will cause a larger drop in your credit score that can last up to 10 years.

To keep your credit strong, it may help to set up automatic or recurring payment on your accounts. That way you never have to worry about missing a payment.

Remember that it takes time to establish credit. The good financial habits you develop now can serve you well for many years to come.

Oportun: Affordable lending options designed with you in mind

Now that you understand what goes into building good credit, you may want to apply for an affordable loan through Oportun. Visit our homepage to learn about: