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How long does it take to rebuild your credit?

By Rebecca Lake
May 4, 2020

Good credit is something you can’t afford to take for granted. The better your credit score, the easier it may be to get approved for loans and land the best interest rates. 

Yet, building good credit can take time and patience, especially if you’re trying to recover from negative credit history. 

For example, being laid off as a result of the COVID-19 pandemic can mean falling behind on some of your bills. And, paying late on a loan or a credit card during this time can damage your credit if your lender reports it to the credit bureaus. 

So, first things first: If you are struggling to pay your credit card bills due to COVID-19, make sure you contact your credit card companies to ask about their financial hardship programs. 

From there, there are several things you can do to rebuild credit and get your credit score back on the right track. Read on to learn more. 

What affects your credit score?

To understand how to rebuild credit, it first helps to know what can hurt (or help) your scores. 

Your FICO credit scores, which are the scores used by 90% of lenders, are based on five key factors

  • Payment history (35% of your score)
  • Credit utilization (30% of your score)
  • Length of credit history (15% of your score)
  • Credit mix (10% of your score)
  • Credit inquiries (10% of your score)

In terms of what can be most damaging to your credit score, late and missed payments or defaults are at the top of the list. Paying late or not at all signals to lenders that you’re higher-risk.

The good news is that, as stated above, many credit card issuers and lenders are offering options to help borrowers affected by the coronavirus pandemic. For example, forbearance periods give you a temporary break from making payments and this won’t go against your credit. Or, you can ask your creditors to code your account as being affected by a disaster, which wouldn’t count against your score if you pay late.

After late payments, a too-high credit utilization can also work against you. Credit utilization is the amount of your available credit you’re using versus your total credit limit. In addition to late payments due to a loss of income, you may be relying more heavily on credit cards to cover expenses during through coronavirus pandemic. The closer your balances get to your credit limits, the more this can potentially damage your score. 

Having a shorter credit history, a lack of credit mix, and applying for new credit too often can also negatively impact your score. 

4 ways to rebuild credit

It can be frustrating when your credit score is less than perfect, especially if you’re not able to get approved for new credit or you’re paying sky-high interest rates. This doesn’t mean you’re stuck with a low score, however. There are things you can do to rebuild credit and although it may take time, it’s worth making the effort. Here’s how to rebuild credit in five steps.

1. Pay those bills!

If you’ve struggled with paying bills on time in the past, then you need to get a system in place for staying on top of them if you want to rebuild credit. For example, some of the things you can do include:

  • Creating a monthly budget and tracking your spending. 
  • Setting up direct deposit so you can get paid up to two days earlier.
  • Creating bill due date alerts through an online bank account so you know when bills are due. 
  • Scheduling automatic payments from your checking account.
  • Setting up automatic savings deposits to help build an emergency cushion for unexpected expenses. 

Those are all simple ways to keep up with your bills and build a positive payment history. 

The bottom line: If you’ve fallen behind on bills due to the COVID-19 outbreak, reach out to your creditors to see what options might be available. For example, a credit card hardship program can temporarily lower your payment or interest rate so you can get caught up. Relief options are also available to help make student loan and mortgage payments easier to manage. 

2. Get to know your credit utilization ratio

If you’re not sure what your credit utilization ratio is, there’s a simple way to figure it out. Simply divide the balance on your credit card by your credit limit. So if you have a $1,000 limit and a $700 balance, your credit utilization would be 70%. Ideally, you should be aiming for a utilization ratio of 30% or less if you’re trying to rebuild credit. Aiming for 10% or less is even better.

There are different ways to improve your credit utilization, including paying down your balance and requesting a higher credit limit. The key here is not making additional purchases against your new limit to add to your balance. And think carefully about closing credit card accounts. Doing so could shrink your total credit limit, increasing your utilization ratio and potentially hurting your credit score. Not only that, but closing older accounts can decrease your credit age which can also take points away from your score.

3. Opening a new card can help, but be careful

Opening a new credit card is another option for improving your credit utilization, but there are a few things to keep in mind. First off, a new application for credit can result in a hard inquiry on your credit report which can shave a few points off your score. Secondly, you have to be careful about how you use your new credit card. Running up a large balance can work against you if it results in a higher overall credit utilization. 

If you have poor credit, be aware that you might not be able to qualify for a traditional credit card. You may have to choose a secured credit card instead. Secured cards require a cash deposit to open, which typically doubles as your credit line. If you’re opening a secured credit card to rebuild credit, be sure that the card issuer reports your account activity to the major credit reporting bureaus. 

4. Don’t be afraid to ask for help

While rebuilding credit is something you can do on your own, it can sometimes be overwhelming. If you find yourself needing help rebuilding credit, there are several things you can try, including:

  • Credit and debt counseling
  • Debt management programs
  • Debt consolidation or refinancing
  • Reaching out to family and friends

Credit repair services are another possibility but it’s important to do your homework. Many of these organizations charge a fee. While they can save you time, they won’t save you money. And in some cases, credit repair companies may simply be scams

Again, it also pays to stay in touch with your creditors and lenders during tough financial times. They may have options to help you get past due accounts caught up so you can work on building positive credit history going forward. 

And it also pays to be vigilant in monitoring your credit report for potential errors or suspected fraud. COVID-19 scams abound and some of them can target your credit information, resulting in credit score damage. 


These products are not endorsed or offered by our partner, Stride Bank, N.A. Tap here for more info and our Advertiser Disclosure.

Improve your credit by removing credit report errors! Dovly offers an automated credit repair tool that lets you track your progress online 24/7. ⏰

How long does it take to rebuild credit? 

Remember, slow and steady wins the race.

The answer is different for everyone but it’s important to remember that it doesn’t happen overnight. While it can be easy to erase points from your credit score, it often takes time to add them back. You can help by practicing good credit habits: pay your bills on time, keep your balances low and limit how often you apply for new credit. By following these practices, you’ll begin to see some improvement with your credit score. 

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