Bad credit can prevent you from accessing many areas of life, from loans and credit cards to financing, affordable housing, car insurance and certain jobs. While breaking this cycle may take years of hard work and dedication, repairing it is possible with perseverance and patience over time. Below is how long it typically takes to rebuild bad credit to fair credit status as well as some strategies to help get there as soon as possible.
As part of your efforts to repair your credit, the first step should be obtaining and reviewing a copy of your credit report for errors. Mistakes on credit reports aren’t uncommon and even one mistake can reduce your score significantly. If errors do appear on your report, be sure to dispute them quickly – the credit bureaus have 30 days to investigate your dispute, while they may request documentation that supports your claim. Disputed errors typically stay on your report for seven years but could potentially be removed earlier if evidence can be shown of inaccurate and unverified data.
Limit your credit applications as much as possible to protect your score from falling when lenders run hard credit checks, which could ding it by one to five points. When applying for loans or credit cards, try opening at least six month old accounts so as to increase average account age and improve score.
As well as correcting credit errors, it’s also wise to pay bills on time and in full – something which is considered when calculating FICO score calculations; missed payments can have devastating effects on one’s FICO rating.
Make an investment in yourself today by setting aside some funds in an emergency fund – not only will this protect against catastrophic financial events, but it will help avoid credit as an emergency fix that could end up leading to more debt and potentially credit damage.
Rebuilding your credit after experiencing major negative financial events may take some time and patience, but it’s possible. By applying knowledge, patience, and Churchillian diligence with your budget you can start seeing your score rise up to where it should be. Just keep in mind that improving it may take longer if the initial cause was something insurmountable such as bankruptcy or foreclosure; however if recent negative events occurred then your goal could be closer than you think.
