How Long does it Take to Build a Credit History?

In as little as six months to a year, you can build your credit history; however, do you want a good credit history? That is going to take a little more time.
How Long does it Take to Build a Credit History?

Aside from a credit score, lenders are going to look at another aspect of your credit profile – how long you have had your accounts. Why am I telling you this? Because lenders want to see how responsible you are and if you can really handle managing debt. Unfortunately, having one credit card with a $300 limit for half a year isn’t going to cut it.

If you want to have a lender take you seriously, you need more. But more of what?

Doing More to Get Your Credit in Check

There are several things you can do to get a truly great credit background. While making on-time payments is a no-brainer, there are other factors that you need to consider.

  1. Length of time. When you have more accounts that have been open for more than a year, you are able to show that you are able to keep up on your payments. A generally acceptable amount of time for lenders is over a year to two years.
  2. How many accounts were opened at the same time? If you have seven credit cards opened in the last month, for example, that may indicate to a potential lender that you are in some sort of financial crisis.
  3. What is your credit utilization ratio? When it comes to revolving credit, you should try to keep the utilization of your cards to a maximum of 30% of your total available credit lines. For example, if your total available credit card limit is $4,000 you should only owe up to $1,200. You could use the entire 4k each month if you want, but your debt shouldn’t be any higher than 1,200.
  4. What is your debt to income ratio? This is how a lender determines of how much of your monthly income goes towards paying your existing debt. If too much of your income goes towards paying balances, this is a red flag to a potential lender. Keep this ratio low.

These four things are key to having a fantastic score and history. There are some methods to get ahead in the world of credit. One of them is getting specialized auto financing, and then being sure to make your payments on time.

This is a type of auto financing where your credit isn’t an issue, but you can use it to build your credit by making consistent and on time payments. When other lenders see a car loan on your report, they can see that in addition to revolving credit, you are able to manage installment credit as well; showing financial responsibility is a big part of what lenders look for.

Keep Us in Mind

When you are looking for an automobile and need to build or improve your credit, this is a great thing to keep in mind. Here at Auto Credit Express, we have spent more than two decades helping people just like you get the approval they need to get into a quality vehicle and improve their credit. Once you have filled out the fast and simple application, we find a dealer that fits your needs. We can help you get your credit to where it needs to be. Get started today!

Posted on July 12, 2014 by in Bad Credit
Reader Comments

Comments are closed.

Apply Online Search