How Long Does It Take to Build Good Credit? Timeline and Expectations

Moneymagpie Team 10th Apr 2025 No Comments

Reading Time: 3 minutes

You must have heard about “good” credit being important for your financial wellbeing from family, friends, and online articles. But as rampant as the advice to build a good credit might be, not many people take the time to explain what good credit actually does for your finances or how you can achieve it.

To help you understand good credit, here’s an overview on credit building, its timeline, and its general benefits.

Why is Good Credit Important?
How is Credit Score Calculated?
How Much Time Does It Take to Improve Your Credit?
How Do You Improve Your Credit?

Why is Good Credit Important?

Simply put, credit is your potential to borrow money and use certain services. A “good” credit refers to a high credit score. The higher your credit score, the more chances you have for your borrowing applications and service requests to be approved by lenders and providers along with perks like low interest rates. It’s because your credit represents your history of payments and commitments. This history gets sent to major credit bureaus that lenders refer to while reviewing your application. After understanding how credit is calculated, you can learn how to clean up your credit record.

How is Credit Score Calculated?

Your credit score is calculated by various factors that include but are not limited to your payment history, your debt-to-income ratio, and your overall utilization of your approved credit. By making a habit of credit monitoring, you can keep tabs on your credit score and see what you can do to improve it with small but effective steps. You may also want to know that credit scores are typically calculated between the ranges of 300-850. A good score is between 670-739. A very good score is between 740-799. Whereas, an exceptional score is between 800-850.

How Much Time Does It Take to Improve Your Credit?

The time it takes to improve your credit score depends on where it currently stands and if it has any factors like overdue payments impacting it. If you are starting from scratch, you may see your first credit score within six months of opening your first credit account. With no past negative records, it typically takes a few more months for you to reach the good credit score range. But if your credit score is impacted by past missed payments, you may need to wait a couple of years to see major improvements.

How Do You Improve Your Credit?

You can improve your credit by building good financial habits like using a classic refillable journal for budgeting and knowing how to manage your money. To support you in this journey, here’s how to enhance your credit.

Make Your Payments on Time

Making your payments before their due date is one of the simplest yet most effective things that you can do to improve your credit. This includes your loan payments, credit card payments, as well as other obligations like medical bills that might be sent to collection. This shows your responsibility and improves your credit month by month. You can use a reminder app to stay on top of your payments.

Think Twice About Closing Your Oldest Account

The average age of your credit history plays a significant role in calculating your credit score. That’s why, you should try to keep your oldest credit account like your first credit card active for as long as possible. This is one of the easiest ways to improve your credit score. At the same time, you should make sure that the account doesn’t come with high interest rates.

Maintain a Diverse Credit Mix

Your credit mix is the combination of credit products you have in your name. As a rule of thumb, you need at least one installment credit product like an auto loan and one revolving credit product like a credit card in your credit mix. You can think of this approach as being similar to using a portfolio management app to have different assets at hand at all times.

Be Careful About Your Credit Utilization Ratio

Your credit utilization ratio highlights how much of your approved credit you have used from your credit cards and lines of credit. This ratio should ideally be under 30% of your approved credit. According to some experts, it’s good to have this ratio under 10% of your approved credit instead. You can learn how to build a credit score fast by mastering this balance.

With these suggestions, you can set yourself on the path to good credit. Depending upon your current credit score, you can achieve this goal in as little as a few months.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.