How Long Does It Take to Build Ruined Credit?

If you've run into some difficult issues in life, you might be working with bad credit. If so, you're not alone - 15% of Canadians have a credit score that's considered poor enough where it's difficult to gain access to credit products. Even still, every single one of them is capable of raising their credit with a little hard work and planning.

Many people's number one question is - how long will I have to wait until my credit score is better? If you do nothing but wait, then it could be as many as seven to ten years! However, you can speed that up by taking a few proactive steps. Let's dive in.

Option One: No Work

If you do nothing proactive to improve your credit score, then it could take as many as seven to ten years. Most bad marks (for example, a missed payment or repossessed car) will not be reported after that time frame. That means when someone pulls your score down the road, they won't know what happened, and your score could be normal again.

However, if you do nothing at all, then while the bad things will leave your credit score, nothing good will show up. For example, if you never use a credit card again, never take a loan again, or never own a home again, you won't have any new history to replace the bad history. This means you could be looking at "no credit," which is actually worse!

Option Two: Minimal Work

If you don't want to do too much work, but still want a good credit score, then you can take a few steps over the next few years to get a better score. First, start by tracking your budget and making sure you always have more money coming in rather than going out. Mint.com is a great option as it's free and can also track your debts.

Make it your goal to pay off all debts without missing a payment. This eliminates the issues bringing your credit down and boosts your score with successful and timely payments. Keep in mind; it might be a long process; however, it will pay off in the end with a better credit score and with more opportunity.

Option Three: More Work

If you want to get down to business today so that you can have a good credit score as soon as possible, then work lies ahead. To begin, budget your money and make sure you're paying off your debts, as we talked about above.

In addition, don't be afraid of taking out a new loan. You might have to take out a bad credit loan (like those we offer here at iCash), but if you pay it off on time as soon as it's due, it will show lenders that you've learned from your past mistakes.

Make sure you never use more than 30% of your credit limit and try to pay off your credit card each month, multiple times a month. Finally, look at your credit score! Chances are there are mistakes that can be taken off to improve your credit score overnight. It might be hard, and it will still take time, but you'll end up educated about finances with a great score to back it up.