Attempting to rebuild your credit might seem as easy as pushing a boulder uphill sideways. But there is a silver lining to FICO score-darkened clouds: six months can potentially be adequate time to achieve some progress in the right direction.
Whether you’ve maxed out a few credit cards, are buried in student loan debt, or maybe fallen behind on paying monthly bills, by tweaking some of your current credit usage and becoming more financially proactive, you can start turning things around without winning the lottery.
Poor Credit Can Slam the Brakes on Your Life
Having a lower FICO score can hinder nearly every aspect of your financial life. For example, you’ll most likely pay a higher interest rate on car, mortgage, or personal loans (if you’re considered for approval at all). Many property managers run credit checks on prospective tenants, and if you’re going for a lease with poor credit, you’ll probably be denied or forced to pay an absurdly high security deposit.
Credit weighs heavily with rates for both car and home insurance. If you don’t have a strong score on your side, the ball isn’t exactly in your court. Rebuilding your credit over the next six months can start chipping away at these financial barriers and get you back in control, where you belong.
What Is a Credit Score?
Your credit score is like a financial GPA, composed of three-digit numbers between 300–850 that essentially tell lenders your overall risk and creditworthiness. The most common credit scoring models are FICO and VantageScoreⓇmodels, but most lenders tend to rely on FICO scores. If you’re applying for a loan and your score is on the higher side, you’re seen as a lower credit risk because you have a higher probability of paying back your debt on time. If your score is poor, the likeliest scenario is that you are denied approval for the loan.
Credit scores can be affected by a multitude of factors, from payment history and credit utilization to missed or late payments. Collection accounts, in particular, can sink your score like a millstone, but it’s still not impossible to increase your score in six months, even if you may be unable to predict the exact number you can reach in that timeframe.
How Long Will Rebuilding Your Credit Take?
Before we can approach how to start fixing your credit, it’s important to establish what “rebuilding” it means in the first place. Basically, if your score has taken a hit and dropped below 670 (the start of a “good” FICO score), then your credit is considered in recovery, and the time it takes to rebuild depends on how severe the damage is. Take a closer look:
Negative Item Estimated Recovery Time
30-day late payment Up to 9 Months
Maxed-out credit cards 6 Months or More
Collections Up to 7 years
Bankruptcy (Chapter 7) Up to 10 years
The good news is that if you’re dealing with high utilization or a few delinquent payments, six months may be just enough time to rebuild, or at least start rebuilding, your credit. Again, you can’t get a crystal ball to find the exact number you can reach, but it’s really about addressing (and correcting) any negative payment behavior and financial habits… but how do you start?
Here’s what you need to know.
Know Your Credit Score
This may sound like a no-brainer, but if you’re unaware of your credit score, how can you start improving it? You can check your current credit report score from all three bureaus (TransUnion, Experian, and Equifax) through AnnualCreditReport.com, or use Experian’s own Free Credit Score to see your real-time progress.
Look out for incorrect or outdated information, high balances, delinquencies, or collections. If you spot an error, dispute it with the bureau directly, which could possibly give your score an increase if corrected. Bear in mind, however, that there will have to be a legit reason (consumer law violation, fraud/identity theft, etc.) to make the dispute valid.
Pay All Bills On Time–Without Exception!
The most significant factor that influences anyone’s credit is their payment history, making up 35% of their FICO score. It’s simple: do you pay your bills on time? If not, a single missed payment can tank your score up to 100 points. How can you avoid it? Enroll in autopay or set up reminders when bills are coming up. If paying bills on time has been problematic, know that six months of consistent on-time payments can increase your score in a major way! That should be your motivation to make this a priority.
Decrease Credit Utilization
Credit utilization, which is the amount of credit you’re using in comparison to your available credit, is estimated to impact around 35% of your FICO score. If you can maintain a utilization rate of 30% or less (10% is golden), your score will likely improve. Do what you can to pay off credit card balances–use the snowball or avalanche method for consistency–and just be plain aggressive.
Quick Tip: Consider requesting a credit limit boost from your credit card issuer to bolster your utilization ratio almost overnight, provided that you can avoid racking up more charges.
Credit Builder Loans/Secured Credit Cards
If your FICO score is at the bottom of the barrel (580 or lower), it may be beneficial to use specific tools designed for credit rebuilding and recovery. Credit builder loans are typically for less than $1,000 and are basically “enforced” saving plans where the loan is held in the account until repaid, at which time the money is deposited to you, plus accrued interest.
Secured credit cards are another option, requiring a security cash deposit which acts as a credit limit visible to the three credit bureaus, and if you demonstrate on-time payments, your credit history can start improving. Both Discover and Chime offer secured credit cards with cashback and other perks, and using these tools can start reflecting a new, positive credit history as soon as the first month.
Maintain Old Accounts
15% of your FICO score accounts for the specific length of your credit history. Your score can be negatively affected if older accounts are closed out, which shortens the span of time of your average credit. If you have an old credit card and hardly use it, keep it open and in good standing to show you’re capable of maintaining your credit account over a longer period of time.
Have a Diversified Credit Mix
Curating a mix of installment loans, lines of credit, and revolving credit (cards) makes up for roughly 10% of your FICO score and often shows creditors that you can successfully handle different kinds of debt.
Beware of New Credit
It may be tempting to open a lot of new credit accounts at once, especially if you could use the money. But each time you apply for a credit card or emergency loans, there’s a hard credit check, and if you apply for more than one in a short period of time, it’s a red flag to most lenders and can affect your FICO score.
Can Credit Really Be Rebuilt in Six Months?
This is the big question–and yes, it can–if you’re consistent and stick to an actionable plan. But what does an attainable rebuild plan for your credit look like? Consider this timeline:
- First month: Check your credit reports and dispute discrepancies if needed to start with a clean slate.
- Second and third month: Pay down balances and make on-time payments to begin rebuilding your credit.
- Fourth to sixth month: Improve your utilization by requesting a credit limit increase, followed by adding a new credit mix like a secured credit card once your score has improved. By month six, just keep the momentum going and regularly check your FICO score.
A plan like the one listed above could mean big point bumps in the next six months, if followed correctly. Of course, everyone’s situation is different, but it is important to strive for what you know is within your reach.
Your Credit Can Make a Comeback in Six Months
Even if you find yourself at the bottom of a credit pit, rebuilding it in six months is achievable. Major improvements to your score will likely take much longer, but it is possible to increase your score over time if you change your payment behavior and financial habits. Your credit score shouldn’t define you–so start taking the necessary steps to credit recovery today and in six months, your credit could reflect a newer, financially savvy you.
