You will need to be patient when it comes to correcting your credit score. Usually the process takes a few months or longer. For most people, it is reasonable to expect six months to a year before things start returning to normal. This is in part because credit bureaus look for regular payments and signs of consistency, which can only be measured over time. So what can you do to get the ball rolling?
Your FICO score looks like this:
- 35%: Payment history.
- 30%: Payments you owe.
- 15%: Length of credit history.
- 10%: New credit (not a positive).
- 10%: Types of credits you use.
The first thing you should do is get in touch with all your creditors. If you are late on payments, you need to get current. Either do this by paying your bills on time every month in full, or renegotiating with your creditors until you agree on amount you can pay in full each month. Many creditors will be happy to work with you, if a new amount results in consistency and timeliness on your part. From that point on, make sure you keep paying in full and on time each month on all loans and bills. This is the single most
effective thing you can do to start improving your credit score.
New credit is a bit of a red flag on a file, but in your case, if you do not have a credit card, you may want to apply for one anyway. Go for a secured credit card. With this type of card, you need to have several hundred dollars on hand to act as collateral, or you will need a cosigner on your card who will bear your debt if you don’t pay off your card. After several months paying off your credit card in full, you can probably reapply for an unsecured version of the card.
You don’t need to check your credit score all the time, and doing so won’t help you out since you only get three free reports per year. Check every six months or so for progress; there is no reason to check more often than that. If you take immediate action and follow through consistently, you should see some major improvements, probably within the year. I know that may sound interminable, but the sooner you get started, the sooner you will have the score you need to apply for a loan. In the meantime, you will have to do what you can to make ends meet.