How Long Does It Take to Build Credit?

Nobody is born with a credit score. We all have to start somewhere. When it comes to building credit, the sooner you begin, the better. But how long does it take to build credit?

Whether you’re trying to establish credit history for the first time or you’re looking to rebuild your credit after a slump, it’s important to understand how the process works before you begin.

How long does it take to build credit?

You might wonder: how long does it take to establish credit from the beginning? Even if you get off on the right foot with building credit, it can still take years to get an excellent credit score. If you’re starting from scratch and have no credit accounts at all, you’ll need to open a credit account that reports to credit bureaus. Ideally, that credit account should report to all three credit bureaus:

• Experian
• Equifax
• TransUnion

Most credit card issuers and lenders do report to all three bureaus, but if you’re not sure, it’s okay to ask. 

It may take some time to generate a credit score. How soon you’ll see a score depends on the type of credit score you’re talking about:

• The account usually must be open for six months before you get a FICO score
• You may have a VantageScore as soon as the account makes its first report to credit bureaus

About 90% of lenders rely on FICO scores as opposed to VantageScore.

Even if your payment history is perfect, your credit scores may not be very high at first. That’s because both FICO and VantageScore consider the length of your credit history in their calculations. Lenders want to see that you can responsibly manage credit over time.

What does length of credit history mean?

The length of your credit history is the total amount of time you’ve been using credit. However, when FICO and VantageScore look at your length of credit history, they’re typically factoring in three data points:

• Age of Your Oldest Account: How long ago you opened your first credit account
• Average Account Age: Combined ages of all credit accounts divided by the total number of accounts
• Age of Your Youngest Account: How long ago you opened your most recent account

You might wonder why lenders pay attention to the ages of your new credit accounts as well. If you open several credit accounts in a short period of time, it looks like you’re desperate for credit, and that’s a red flag for lenders.

How does credit history length impact credit scores?

The length of your credit history isn’t the only thing that matters when it comes to calculating your credit score. How much it matters depends on whether you’re looking at your FICO score or VantageScore. When calculating your credit score, FICO uses these five weighted factors:

• Payment History: 35%
• Credit Utilization: 30%
• Length of Credit History: 15%
• Credit Mix: 10%
• Amount of New Credit: 10%

VantageScore uses similar factors with slightly different weights:

• Payment History: 40%
• Depth of Credit: 21%
• Credit Utilization: 20%
• Balances: 11%
• Recent Credit: 5%
• Available Credit: 3%

In this calculation, “depth of credit” includes both the types of credit accounts you have and their ages. Lenders want to see that you’ve maintained several types of accounts over a long period of time.

How to get approved for credit with little credit history

You now know that the answer to the question “How long does it take to build credit?” depends on your circumstances and credit goals. You have to access credit to build it, so you might wonder how you can get approved for an initial credit account when you have a short credit history or none at all. These are a few strategies to help you start:

Apply for a secured or student credit card

Secured credit cards and student credit cards are ideal for anyone looking to build credit. With a secured credit card, you pay the card issuer a cash deposit that then becomes your credit line. As you make purchases and pay off your credit card balance, your credit score improves. Over time, many lenders will upgrade your card to a standard credit card.

Student cards aren’t secured, but they usually have low limits. As long as you make your payments on time, many card issuers will eventually increase your credit line.

Try a credit builder app

Credit builder apps make it possible to build credit right from your phone. Once you sign up, you access a small credit line or loan. When you make payments, the app reports to all three credit bureaus, helping you establish a strong credit history.

Kikoff is one of these apps. We don’t check your credit when you apply. If you’re approved, we give you a credit line you can use to buy items from the Kikoff store. We report payments to all three credit bureaus, and you don’t pay any interest on your purchases.

Become an authorized user

If you have a close friend or family member with good credit, you might ask to be added as an authorized user to their account. When this happens, the positive payment history on their account is added to your credit report.

Conclusion

Building credit can be challenging, but it’s not a journey you have to take alone. Getting approved for credit with little history or a low score can be tough, but that’s why we’re here. Kikoff was designed for people who want a reliable way to build or rebuild credit. 

It only takes a few minutes to get started, and we strive to make building credit easy and fun. Open your account with us today!