Your credit score shows both your short- and long-term credit history, so building a perfect credit report can take years. However, there are many steps along the way, and you can see some improvements to your credit score in a matter of weeks. Here’s how long changes should take to be reflected in your credit score.
Paying Down Credit Balances
Paying down a credit card or other balance is one of the fastest improvements you can make to your credit. Your credit utilization score is a real-time factor that only looks at your current balances and has no memory of the past.
Any payments you make to reduce your balance by your due date will be reflected on your next statement. As soon as the credit bureau receives your new statement (usually within a few days), your credit score should go up. Some credit card companies will even update your balance with the credit bureaus early if you call and ask.
Stopping New Credit Applications
Another nearly instant change is when you stop making new credit card or loan applications to try to dig out of debt. Each application lowers your credit score, so stopping is the first step to improving.
Once you stop applying for new credit, your previous applications stop affecting your credit relatively quickly. They’re only reflected on your credit report for two years, and don’t even affect your credit score after the first year. Better still, the effect of a credit card application is lessened after a few months. You should see credit score improvements even before the year is up.
Successful Credit Report Disputes
If you believe information on your credit report is incorrect and file a dispute, the credit bureau has between 30 and 45 days to investigate the dispute depending on its type. If your dispute is successful, the credit bureau must immediately update your credit report.
If the information you disputed was completely erroneous or unsubstantiated, it will be removed as if it never happened. Your credit score will be recalculated without the negative information.
If the information was correct but the date was wrong, the date will be adjusted. Because negative items have less effect on your credit over time, if the date is adjusted into the past, you should see a bump in your score.
The total time to complete a dispute and have your credit reported updated should be about two months.
You may hear that closing an old credit card will drop your credit score — that’s a myth. If you’re trying to fix your credit, you might wrongly think you need to keep paying an annual fee to keep your credit score up. If you don’t like a credit card, go ahead and close it today.
Positive account history stays on your credit report for 10 years after you close the account. By then, you’ll have replaced the positive history with more positive history.
The only thing to worry about is if you have a credit card with a high limit that accounts for a large portion of your available credit. In that case, closing the account could increase your credit utilization and lower your score. But, as explained above, your credit score will bounce right back up once you’ve paid down those other balances.
Late and Unpaid Accounts
If you have late payments, charge-offs or collections on your credit report, these items are generally reported for seven years plus 180 days from the date they occurred. After that time, they will fall off your credit report.
Luckily, their effect also lessens over time. You will see credit score improvements long before seven years as long as you don’t incur new negative items. In addition, isolated late payments lose weight much faster than longer patterns.
There are also a couple of tricks to removing these items even sooner. One is simply catching up on your payments, then calling or writing a letter to the lender apologizing for your mistake and asking the lender to remove the negative report. If that doesn’t work or you’re still behind on payments, some lenders will agree to remove the negative report in exchange for immediate full payment.
Tax liens are another reason to avoid owing money to the IRS. An unpaid tax lien can stay on your credit report for up to 15 years, and paid liens remain for up to seven years.
However, the IRS is forgiving if you pay your debt or make arrangements to pay. Depending on the amount you owe and how delinquent your account is, you may be eligible to have the lien erased as if it never happened.
Bankruptcies stop collections and wipe out past due balances, but they don’t wipe your credit report clean. All negative information from before the bankruptcy will stay on until its usual expiration date. The bankruptcy itself remains on your credit report for 10 years.
Like with other negative information, the impact of a bankruptcy lessens over time. People who make a focused effort to rebuild their credit after a bankruptcy can often reestablish a good credit rating within a year or two after their bankruptcy.