How Fast Do Points Increase in a Credit Score?

If you've had some financial trouble in the past that damaged your credit score, you may be wondering how long it will take to repair it. Creditors report information to credit bureaus every 30 days or so, so your credit score is constantly changing. However, it will take more than a month to undo the damaged. Depending on the state of your credit history and how well you manage your money, you may be able to raise your score significantly in as little as a year.

What's a Credit Score?

A credit score is a three-digit number that tells potential lenders whether or not you're creditworthy. Every time you borrow money, the lender will report it to one or more of the major credit bureaus (Equifax, Experian and TransUnion). The bureaus compile this information into a credit report. Every time you apply for credit, the lender will request your credit report from the bureau. Since the reports are long and cumbersome to read, the bureaus summarize all of that information in a credit score.

How the Score is Calculated

The exact formulas used to calculate credit scores vary from bureau to bureau and are secret. What is known is the sort of things that are taken into account and their approximate weight in determining the score. Thirty-five percent of your credit score is made up of your repayment history. Another 30 percent relates to the total amount you owe. Around 15 percent has to do with the length of your credit history. The types of credit you have and how often you apply for credit each make up around 10 percent.

Increasing Your Credit Score

The easiest way to increase your credit score is by making all of your payments on time. If you do this for at least a year, your credit score should increase dramatically. Another option is to pay off some of your debt if you can. If the lenders think you've borrowed more than you can handle, your score will drop. On the other hand, if you're only using 30 percent of your possible credit line, the score will go up.

Time Frame

Nothing stays on your credit report indefinitely. Most negative information is erased after seven years. This includes missed credit card payments and defaults on loans. Bankruptcy can stay on your report longer. If you've filed for Chapter 7, it'll be on your report for 10 years. There's nothing you can do to erase that information before it's set to expire, but if the rest of your credit history is good, it may not matter very much.

Errors

In some cases, a low credit score may not be your fault. For example, if there's a mistake on your credit report, it can ruin the score without you knowing about it. It's important to check your credit reports on a regular basis. If you do see a mistake, you must file a dispute directly with the bureau. It'll take 30 days for the bureau to evaluate your case. Once the error is corrected, your score should go up almost immediately.