What is the amount of time it takes to rebuild credit score? If your credit score has been impacted for any reason, how long will it take to recover? These are two questions we are asked fairly frequently.
So frequently that we asked our Freelton auto loan team to outline the time it takes to rebuild credit enough for you to get a car loan.
Rebuilding credit in Freelton
First off, let’s be clear. The actual time it takes to rebuild credit will vary depending on how low your score is and how much effort you put into rebuilding it. So, we cannot tell you exactly how long it will take to rebuild your particular credit score.
But we can give you an idea of what to do and how long it might take.
Typically, a credit score will be between 300 and 900, with higher being better. Apparently, the national average score in Canada is 650. Anything over that and you can consider yourself in a good place.
You can begin rebuilding your credit right away but it might take between 3-6 months to see a difference.
Organizations like credit card and loan companies will update your credit report monthly or longer, depending on the type of account. These are payment periods.
So, if you start making overpayments on your credit card to reduce the balance, or set up automatic payments so you never miss another payment, it will take a while for these changes to be reported.
Start with the rebuilding
The fastest and cheapest way to rebuild your credit score is to get everything in order.
Create a budget and list all your income and outgoings. List all your debts and how much each payment is per month.
Then set automatic payments for every outgoing you can so you never miss another payment. As missed payments are the single biggest hit your credit score can take, we want to prevent those as much as possible.
Use a credit card to rebuild
Rebuilding credit can be as simple as using a credit card regularly, making minimum payments using that automatic payment and clearing the balance each month.
You should never miss a payment and keep your credit utilization low because you’re clearing the card.
Use one or two cards regularly, as you need and you’ll soon start to see your credit score increase.
Pay down other debts as much as you can, prioritizing the most expensive first and this will help with your debt to income ratio. Clearing credit card debt will also help reduce credit utilization. Both things contribute to improving your credit score.
When it comes time to get a new phone contract, use a network that makes entries on your credit report. The same for household utilities and even landlords if you rent.
When, when you’re ready, you can use an auto loan to help rebuild credit in the same way a credit card does. Regular payments on your report will help rebuild your credit.
Rebuilding credit isn’t fast but it is easy. As long as you have the resources to pay down debt and manage monthly payments, you have several tools at your disposal to improve your situation.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!