How Long Does It Take to Repair Your Credit? Part One – Factors That Increase Credit Repair Times
Do you read introductions? Or, do you skip to the first header? If you do read introductions, then you will be one of the few who understands why this article contradicts quite a few other online articles on the subject of credit repair. This article contradicts quite a few other articles on the subject, and it even contradicts some of the online articles created by the credit bureaus. The reason why this article contradicts many other articles on this subject is because many articles are written by people who consider themselves an expert because they read a Wiki on credit repair.
Secondly, this article covers fixing your credit from a wide angle that includes all the factors that may affect the credit repair process. It includes factors that make you creditworthy as well as factors that increase your FICO score. We not only examine the things that directly affect your credit rating, we also include things that indirectly affect your credit.
This article explains which factors affect how long it takes to repair your credit. It features all the factors that slow your progress. It is the first part in our two part series on credit repair. The second part explains what shortens credit repair times, but it is important that you know what is slowing you down before you try to speed things up.
This article covers both how long it takes to repair your credit by examining things that damage your credit rating and by examining things that make you less creditworthy.
Credit Score, FICO Score, Credit Rating = The Same Thing
In this article, “credit score,” “FICO score,” and “credit rating” are interchangeable because they both mean the same thing. Your credit history is similar to your banking history except that it deals with times you have had credit. Your credit history is the thing that lenders look at to see if you have done things that may damage your credit.
How Long Does It Take to Repair Your Credit? – The Quick Answer
How long does it take to repair your credit? If you messed up big-style, then it takes six to ten years to get your credit back to poor-but-not-terrible. If you screwed up royal, then it takes two to seven years, and if you just had a few bad months and have an otherwise good credit history, then it takes between six months and two years.
Factors That Increase How Long It Takes To Repair Your Credit
If you do any of the things that are listed below, then it will take many years to repair your credit score. The things listed below will slow your credit repair process. If your credit repair efforts were the car, then these are your flat tires. If you do some of these things consistently, then you will forever have a very poor credit rating. These are the things you need to avoid doing.
Factors That Increase How Long It Takes To Repair Your Credit – Keep Your Credit Cards Maxed Out All The Time
It is true that your credit score will not get worse if you have maxed out your credit cards and you are still making payments on time. If you are not overdrawing on your credit card, and if you are still making payments, then your credit rating will stay the same and may even go up ever so slowly over time. Yet, your credit score’s rise will be a very slow one.
When you have credit cards that are always maxed, it shows that you have very little control over your spending. It says to creditors that you are not living on the edge of poverty, it says that you feel the need to spend every penny available to you.
It tells creditors/lenders that if they were to give you credit, then you would run it up as high as it would go and you would stay in the maxed-credit/minimum-payment limbo for as long as they allowed you to.
Factors That Increase How Long It Takes To Repair Your Credit – Keep Your Overdraft Maxed Out Most Of The Time
This is actually worse than having your credit card maxed out all the time. It is cheaper to have a maxed out overdraft on your bank account than it is to have a maxed out credit card, but in terms of how quickly your credit score will recover, it will take a very long time.
The reason why having your overdraft maxed out slightly worse than having your credit card maxed out is because it is actually harder to max out your overdraft and keep it maxed out.
For example, if you have an overdraft of $1000, and you have a job that pays you $1200 per month, then it is bitterly difficult to keep your overdraft maxed out. In fact, you have to spend every penny of your wages up until the next time you are paid in order to keep your overdraft maxed.
Factors That Increase How Long It Takes To Repair Your Credit – You Have Contested Minor Errors On Your Credit Report
If you contest errors on your credit history, then your credit score will remain low and will grow very slowly.
If there is a very large and serious error on your credit history, then you need to inform the credit bureau and you need to go through their error resolution process so they may find out how this happened. However, if there is something middle-to-small wrong, such as there is a hard inquiry on your credit history from “Danny’s Bug Sanctuary,” then just leave it alone.
Anybody who has an error/contest case open with a credit bureau right now, I bid you to close the case. Within just a few months (even weeks) your credit rating will start to rise again as a direct result of you closing the case. Your credit building efforts are being wasted while you have a case open/pending.
An open error/contest case or complaint on your credit profile is a bad thing because it adds something that all credit companies hate…it adds uncertainty. Lenders think, “If there is an error on that person’s credit report, will there be another on there soon? Has that person had his or her identity stolen? Is that person applying for credit without knowing it? Has that person been lying to creditors and that is why some of the information is wrong? Unless the problem/error is a big one, then just leave it alone.
Factors That Increase How Long It Takes To Repair Your Credit – Go Past Due On Your Bills
Late payments (aka, going past due on your bills) will sometimes create negative marks on your credit. These negative marks will stick around on your credit history/report for about 7 years. However, if you miss a payment and it is a one-off, then one of several things may happen. Your credit rating may lower, but it may start rising again after just six months of good behavior.
If you miss a bill with certain companies, some may not report you to credit agencies/bureaus, and it may not affect your credit rating. They may have a policy of reporting people to credit bureaus, but they may give a bit of leeway, such as not reporting you if you pay up a few days after the bill is due. Or, they may have a policy where they do not report you missing payments if they are small, irregular or unexpected.
The company may only report to one of the credit bureaus, which may mean your credit rating is only negatively affected with one of the credit bureaus and not all three (this is becoming rarer, maybe they are sharing information these days). For example, if you miss paying your cellphone bill, then your phone carrier may only report your missed payment to Equifax and not to TransUnion or Experian.
Missing payments and late payments are likely to negatively affect your credit score, but they only become a serious problem if they are frequent. Six months of good behavior, and you will often see your credit rating start to rise again.
Factors That Increase How Long It Takes To Repair Your Credit – Overdraw Into Your Unarranged Overdraft
When you overdraw on your bank account, credit union account, credit card, money company account, etc., several things may happen. What is supposed to happen is that the company/bank reports to the credit bureaus that you have overdrawn and your credit score goes down, but this is not always the case.
Some companies/banks are going to charge you an overdraft fee and charge you interest on the amount you have overdrawn, but they may not report you to one of the credit bureaus. If you are dealing with a credit card, they may also do that and drop you back to their higher “penalty” APR, but will not place a negative mark on your credit rating if you repay the overdrawn money within a few days.
Some banks, such as HSBC, will send you a warning that you have overdrawn and will give you a half a day to fix it. If you fix it, they will not charge you a fee, and they will not inform the credit bureaus. HSBC does this to help people who have genuinely overdrawn by accident, which is usually due to an auto-pay/direct-debt coming out without the account holder’s knowledge or recollection.
There are also banks and credit unions that will happily charge you fee after fee for overdrawing, but they will shy away from informing credit bureaus about your smaller errors because they do not want to damage your credit score. It is in their interest to keep your credit score high so they may lend to you in the near future without any problems.
Factors That Increase How Long It Takes To Repair Your Credit – Get More Than Two Hard Credit Inquiries Within A Six Month Period
Many people think that a hard inquiry on their credit will hurt their credit score, but it won’t. In fact, you can have two hard credit inquires every six months and it won’t hurt your credit score. In addition, it will not slow your credit repair efforts. It is only if you have more than two hard credit inquires within a six month period that your credit score is affected. Having more than two hard inquiries on your credit is a factor that increases how long it takes to repair your credit.
There are soft credit inquiries that do your credit rating no harm. These are the sorts of things you can run online to your hearts content. Many websites allow you to run a soft search to see if they can pre-qualifiy you for their services. Soft searches may be run without your knowledge or consent.
A hard credit search happens when you agree to it. This usually happens after you have pre-qualified and you have decided to go ahead with an application.
In many countries, if you are researching into a product, the service provider has to tell you if it is going to run a hard search on your credit. However, the “level” of agreement varies. For example, you may click the “Agree to terms and conditions” button at the bottom of a comparison website, and later you may click a link to one of their affiliate lenders, you may have tacitly given the lender permission to use your information to run a hard search on your credit.
Side Note – How Long Do Credit Inquires Stay On Your Credit History?
Hard searches (hard credit pulls) will stay on your credit history for two years. However, the hard credit search will stop affecting your credit score after between six months and one year. In other words, if you instigated several hard pulls on your credit today, then it would damage your credit score, but after a year your credit score would have recovered so long as you didn’t do anything further to damage your score. In two years, those hard credit pulls cannot be seen on your credit history either.
Side Note – Why Do Credit Bureaus Lower Credit Ratings When You Have Too Many Hard Credit Searches (Hard Credit Pulls)?
Hard credit searches do affect your credit score as much as things such as a good payment history and the amount of debt you are in. However, credit scoring bureaus will lower your credit rating if you have more than two hard credit searches within a space of six months, and here is why:
Reason 1 – The reasons for a hard credit searches are usually because you have applied for something that will create a new bill/expense in your life (credit card, loan, apartment), or because collections agencies are chasing you. In either case, the possibility of you taking on what could be as many as three new bills/expenses means you are likely to miss payments in the future.
Reason 2 – Credit bureaus have to assume that every hard search has added a new bill/expense to your life, which means they have to assume your financial situation has changed. It takes at least 30 days and up to 6 months for things such as new debts to appear on your credit report. As a result, the credit bureaus have to assume that every hard credit search means you accepted a new expense/bill, be it that you are borrowing money or paying a new rental amount, and that means that your financial situation has changed in a way they cannot predict.
Reason 3 – Your searching for lending services may indicate you are having financial trouble. Again, if you are searching and you have only had two hard pulls on your credit, then that is acceptable, but if you are still searching to the point where there are three hard pulls on you credit, then either you are getting turned down a lot, or you are in big trouble, which is why credit bureau lower your credit score.
Factors That Increase How Long It Takes To Repair Your Credit – Apply For Two Mortgages With Hard Credit Inquiries
Here is an interesting tidbit of information that other online articles seem to neglect to tell you. If you were to apply for two mortgages tonight, and if you agreed to having two hard credit searches, you may believe that your credit score is going to stay in tact because it is just two hard pulls on your credit history, and we know that two hard pulls on your credit are okay within six month periods.
You applied for two mortgages, you took your two hard-credit inquiries, and you were quite happy. Then…a month later, you use Credit Sesame to see your free credit score, and it has fallen! Your credit score has dropped for what seems like no good reason. You take a look at your credit report on Credit Sesame, and the only thing on your credit history that is different is that you applied for a mortgage. So, you ask yourself:
Why-oh-why does your credit rating fall when you apply for mortgages?
The reason is not foreigners, nor is it global warming, the reason is because of a relatively new scoring model. This new scoring model has been invented for credit applications where it is customary to shop around for the best rate.
What happens is that even if your credit history shows that you applied for 15 mortgages last month, your credit score counts all 15 inquires as a single inquiry.
This means that if you apply for numerous auto loans or numerous mortgages in a short space of time (15 – 45 days depending upon the scoring model), then they are all counted as one inquiry and your credit score drops a little.
The downside of this is that if you apply for just two mortgages during that space of time, the new scoring model lumps you in with all the other happy-go-lucky-sons-o-bitches and knocks your credit score the same as it knocks those with many mortgage applications to their name.
In short, if you apply for one mortgage every six months, then your credit rating will not drop. If you apply for two or more within a short space of time, then your credit rating will drop the same amount no matter if you applied for 2 mortgages or 20.
Factors That Increase How Long It Takes To Repair Your Credit – You Keep Taking Cash Advances From Your Credit Card
There are legitimate reasons why a person may need to take cash advances from his or her credit card, and both credit bureaus and lending companies understand that fact. For example, if you are on vacation, there may be a space of two or three weeks where you are taking cash advances on your credit card. Credit bureaus and lending companies understand this, which is why the credit bureau is unlikely to drop your credit score because of cash advances. Lenders are not going to consider you less creditworthy because you took out a few cash advances.
The factor that increases how long it takes to repair your credit, is if you keep taking cash advances. This often indicates that you are in financial trouble that you cannot handle. It also indicates that you may be in more debt than your credit report is showing.
Even if the credit bureaus do not lower your credit score, you will find that it doesn’t rise very quickly either. Plus, you may find that lenders will refuse you credit because they find you less creditworthy.
Factors That Increase How Long It Takes To Repair Your Credit – Get Refused Credit By A Lender On More Than Two Occasions Every Six Months
Equifax tried to clear this up, and we are going to muddy it again for you. Equifax said that if you apply for credit and a hard search is run on your credit, then this will negatively affect your credit score if you do it more than twice in a six month period. We agree with that part. Many of the credit companies we test will run a soft search on our credit, which doesn’t hurt our credit score, and then they will run a hard search on our credit if we agree to use their lending services. The hard search affects our credit score.
Equifax also says that if you apply for credit and you are refused, then that refusal will not affect your credit score. We only partially agree with that. When we apply for credit, the lenders run a soft search, and then a hard search if we agree to it. If we are refused after the hard search, it does become more difficult to get credit within the next six months.
Many of the lenders we test will ask explicitly if we have been refused credit elsewhere. Even if that refusal doesn’t show on our credit history or credit score/rating, the credit company/lender still asks if we have been refused credit, and we are legally obliged to tell them if we wish to continue the application. It is illegal to lie on credit applications. Ergo, we say that begin denied credit makes you less creditworthy, even if it doesn’t directly lower your credit score.
Factors That Increase How Long It Takes To Repair Your Credit – Keep Moving House Every Few Months
Will it hurt your credit rating? No it will not, but it won’t help it rise either. Lenders need you to be as predictable as possible. They do not want you moving around the country all the time.
When you sign up for credit, they often ask for all the addresses you have lived at for the last three years. You are more creditworthy if you only enter one address that you have been living at for more than three years. The more addresses you add, then the more nervous they become unless you are in the military.
Factors That Increase How Long It Takes To Repair Your Credit – Keep Switching Your Job Every Few Months
Credit companies like stability. It is true that a sudden drop in your wages will not affect your credit rating, nor will losing your job (in most cases). However, if you keep switching jobs every few months, then credit companies may have a harder time lending to you.
Switching jobs all the time will not negatively affect your credit score, but it will slow the progress of your credit repair. What’s more, the after-effects of you moving jobs all the time is more damaging than you may first imagine. Let’s say that your credit rating is on the rise and it is poor-but-not-terrible. You then apply for a reasonably priced credit card and you are turned down because you have only had your current job for five months.
That hard credit inquiry that didn’t lead to lending is going to slow the rise of your credit score. It may not damage it, but it will slow its rise. What if you then apply for another credit card or lending facility? And, what if you are denied for the same reasons? That is two hard inquires on your credit history with no lending facility to show for it. You are veering very close to credit-damage territory.
Factors That Increase How Long It Takes To Repair Your Credit – Trying To Fool The Credit Companies By Signing Up For New Credit Cards To Help Lower Your Credit Utilization
The credit bureaus have been known to fall for this trick. Let’s say you have two credit cards and both of them have been maxed out for months. You are paying the minimum payments, but your credit utilization is at 100%. The trick is to sign up for crappy credit card for people with poor credit; the sort of credit card where the APR is sky high. You get your new credit card and you do not spend on it. Do this, and your credit utilization is reduced and your credit score improves.
It is a quick-fix tactic that doesn’t work. The tactic may help improve your credit score, but lenders will still refuse to give you credit. Instead of refusing you with excuses about your credit score, they will give you excuses about something else.
The lending companies that used to tell you they will not lend to you because your credit score is too low will now tell you that they cannot lend to you because you are in too much debt. Even though your credit rating has improved, you are no closer to being creditworthy.
Factors That Increase How Long It Takes To Repair Your Credit – Having Too Many Lines Of Credit Open Or Being In Too Much Debt
I mention this after the “Trying To Fool The Credit Companies” section because opening more lines of credit is one way people try to fool credit companies. People lower their credit utilization by taking out new credit cards and not spending on them.
Such tactics may artificially improve your credit score, but you are no more creditworthy than you where before you took out the new credit card and lenders are still unlikely to lend to you or give you a good rate. If you were to try this trick, then you may not be refused for having a low credit score, you may be refused for having too many lines of credit open.
The Lines Of Credit [And] Debt Amount Issue
I also feel a duty to clear the whole “Lines of credit” and “Debt amount” issue up a little. There are people who say they have been refused credit or some form of lending service because even though they had a good credit rating, they had too much debt. Though it is true that some lenders will reject you because you have too much debt or too many lines of credit open, there are times when saying you have too much debt or too many lines of credit open is just an excuse. It is an excuse that lenders use sometimes.
Giving you those reasons is just the lender’s “Plausible excuse.” A lender may see that your credit score is acceptable, but the lender looks at your credit report thinks you are not creditworthy. The lender doesn’t say, “We think you are not creditworthy, please go away.” Such comments will prompt further questions and complaints from the applicant. The lenders have to give you a reason why they refused you, so they come up with any old excuse, and the whole “You have too much debt” or “You have too many lines of credit” is/are plausible excuses.
As it has been mentioned many times in this article, there is a difference between having a good FICO score (credit score/credit rating), and being creditworthy in the eyes of a lender. Lenders may like your credit score, but still think you are not creditworthy.
Having too much debt is a turn off for lenders, but it is not as big of a deal as you are being led to believe. You would be stunned at how much debt lenders are willing to lumber you with. The same is true of how may lines of credit you have. Even if you have 30 credit cards and you owe $20 on each of them, there are still lenders who will offer you their lending services.
In short, if you are in large amounts of debt, then your amount of debt is a factor that will increase how long it takes to repair your credit. In addition, if you have numerous lines of credit open, then that too will slow the rate at which you repair your credit. However, in terms of how it affects your creditworthiness (i.e. how lenders view your ability to repay your debts), it is not as bad as you are often led to believe. If debt levels really mattered that much to lenders, then how are so many people able to get into so much debt? If debt levels made lenders think people were less creditworthy, then wouldn’t everybody be limited to just $5000 of credit card debt?
Factors That Increase How Long It Takes To Repair Your Credit – Go Insolvent, Go Bankrupt, Or Have Unpaid Tax Liens
Any of these (go insolvent, go bankrupt, or have unpaid tax liens) will be added to your credit history and they will stay in your credit history for up to ten years. Anything to do with taxes can stay on your credit history and damage your credit score indefinitely (for as many years as you are alive), especially if you decide not to pay off your tax debts.
These things stay on your credit history for up to ten years because they are public record information that credit bureaus have a right to report, and because they are very large signals that you do not repay your debt and are therefore not creditworthy.
Even after ten years, do not think that you are out of the woods. Many lenders ask you if you have “Ever” had judgments against you, gone bankrupt, etc. You are legally obliged to inform them, even if you went insolvent 30 years ago.
Factors That Increase How Long It Takes To Repair Your Credit – Being Divorced Or Getting Divorced
Equifax (one of the three US credit bureaus) tried to clear this up by openly stating that getting married and getting divorced does not affect your credit score. Though, they did concede that certain elements surrounding divorce and marriage may affect a credit score.
One of the examples Equifax gave was how divorcing couples have to split marital debt and during the process there may be unpaid bills that stay unpaid until it is decided which partner pays what. They also conceded that the opening and closing of joint accounts will impact each partner’s credit profile and maybe each other’s credit score.
However, despite the protestations of Equifax and others, it seems that getting married and getting divorce almost always has an effect on your creditworthiness.
In many states, any marital debt is considered joint debt, which may include the amounts spent on the process of getting divorced. Equifax says it is only in nine states where this happens, but it doesn’t matter which state you are in, divorce courts are happy to lumber any or both of the partners with whatever debt is there irrespective of which partner ran the debt up.
A creditor agreement trumps any divorce agreement too, which is a surprise to many people getting divorced. For example, if you both take on joint debt with a credit company, and then the divorce court says your partner must pay that debt, the credit company is still legally allowed to come after you and smash your credit score to pieces if your partner doesn’t pay up. Your credit score will be ruined, but the divorce-court’s ruling means that you may sue your ex-partner for the amounts you had to pay towards the debt after the divorce.
Factors That Increase How Long It Takes To Repair Your Credit – Getting Credit Counseling Or Consolidation Loans
Okay, I admit that getting credit counseling will not harm your credit score, and it will not slow the rise if your credit score either, but I had to mention it because of the many charlatans who claim it will help “Raise” your credit score.
Getting credit counseling is not recognized by any of the three credit bureaus as having a positive effect on your credit rating. Many online elements claim that getting credit counseling will demonstrate to credit bureaus that you are making positive changes, but it is just not true. In comparative terms, it is like rewarding an overweight person because he or she watched an exercise video.
Loan and debt consolidation companies are not as bad as the deceivers who claim credit counseling will help your credit score, but the debt consolidation industry is a den of snakes. Almost all of them are looking to get you into more debt. They promise to lower your monthly payments and even lower your total debt amount, but what they don’t tell you is that you will be in debt for far longer, and that they will penalize the hell out of you if you miss just one payment.
It is possible to consolidate your loans and see your credit rating rise. If you consolidate your current debts with a loan, and then pay down that loan without getting into new debt, then your credit rating will improve. However, the act of consolidating your debts alone is not going to raise your credit score. Plus, in most cases, the act of consolidation will increase your amount of debt for a few months, which actually puts you in a worse position for a short while.
If you avoided the shyster loan/debt consolidation companies, and you avoided the deceiving credit councilors and credit repair companies, and you got yourself a consolidation loan, then you need to stay out of new debt. If you get a consolidation loan, and then you go and get yourself into new debt, such as a new credit card, then that is a factor that increase how long it takes to repair your credit.
Conclusion – What We Missed
Is this a comprehensive list of all the factors that increase your credit repair times? No, we have missed a few things, but we consider them to be common sense things. For example, if you are caught and prosecuted for lying on a credit application, then your credit rating and your creditworthiness will take a big negative hit.
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Are there other things that may be slowing down your credit score repair? Apart from identity theft, there shouldn’t be anything else slowing down your credit repair. This article explains things that are hampering/slowing your credit repair. In our article, “How Long Does It Take to Repair Your Credit Part Two,” we set up your first steps towards fixing your FICO score. If you master the lessons in part two, then we move on to part three where things will really hot up.