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June 13th 2023

How long does it take to build credit in the U.S.?

This article discusses why both credit history and credit scores are important in the U.S. and how long it typically takes to build each from scratch.

If you want to build credit in the U.S., you will need at least one credit account reported to a major credit bureau: Equifax, Experian, or TransUnion. 

Once you open that credit account, the financial institution you get it from  will begin to report your account information and repayment behavior to the major credit bureaus. The credit bureaus then create a detailed credit report for you, which is often referred to as your “credit history.” 

From this credit report generated by the bureaus, other third-party companies will create credit scores based on the report. This score is a summary of the underlying information in your report and the most common scores are a number up to 850.

This article discusses why both credit history and credit scores are important in the U.S. and how long it typically takes to build each from scratch. 

Why is credit important in the U.S.?

Your credit history and credit scores are quite important for several parts of everyday life in the U.S. Since your credit shows your track record as a responsible borrower, it will affect your options and terms when you apply for a credit card or loan, including a mortgage, auto loan, student loan, or other private loan. 

With good credit history, you can generally pay lower interest rates and get better terms on credit products. In order to qualify for some of the best credit cards, you will need either a strong U.S. credit score or use a strong foreign credit score from back home.

Once you qualify, these cards offer rewards on your purchases and various protections that can make them a better option than paying with cash or using a debit card. 

Beyond unlocking access to great terms on credit products, credit is important for other day-to-day use cases, such as:

  • Insurance companies might set your insurance rates based on your credit

  • Landlords might check your credit when you want to rent an apartment or home.

  • Some employers review your credit reports when considering your application for a job or promotion.

What is in your credit reports and how does it affect your credit scores? 

Although people often focus on their credit scores, it is equally important to understand the underlying information in your credit reports. This information is easier to map to your monthly behavior, and includes the factors that these scores are ultimately based on.

Credit reports are broken up into several sections:

  • Personal information: Such as your name, date of birth and address. Your personal information doesn’t affect your credit scores, but you still want to make sure it’s correct because organizations use this information to verify your identity and match your accounts with your report. 

  • Accounts: Your accounts are usually credit cards and loans that you are using. However, if you use a service that reports other types of payments to the bureaus, such as rent or utility payments, those can also appear in your credit report. Accounts can help or hurt your scores depending on how you manage the account. For example, paying your monthly credit card or loan payments on time can help your credit, but missing a payment can hurt it. 

  • Collections: If you stop paying a bill, your debt might be sent or sold to a collection agency. The collection account appears in a different section of your credit report. Collection accounts will hurt your credit scores, even if the original debt wasn’t in your credit report. 

  • Public records: If you file for bankruptcy in the U.S., that will be added to your credit report and can hurt your credit scores.

  • Inquiries: Inquiries are records of every time someone requests the credit report. When you apply for a new account, the resulting credit can lead to a hard inquiry, which might hurt your credit scores. Other credit checks, such as when you request a copy of your own credit report, result in soft inquiries that don’t affect credit scores.  

The developers of credit scores will not reveal the exact breakdown of how these different sections affect your credit score, but you should follow a few key principles to maintain a healthy score. This includes always making on-time payments and keeping credit utilization low.

How to quickly establish and build credit in the U.S. 

Establishing and building credit comes down to adding new accounts to your credit reports and responsibly managing the payments and balance on those accounts. 

Here are some of the quickest ways to do that:

Open new credit accounts 

Secured cards, credit-builder loans and unsecured credit builder cards are designed for people who are new to credit. 

If you moved to the U.S. from abroad, you also might be able to use Nova Credit and your credit history from your home country to qualify for a credit card, cell phone plan, auto loan, or student loan in the U.S. 

Add non-credit accounts to your credit reports

Tools like Experian Boost and eCredable can help you build credit with rent and utility payments. However, they only add information to one of your credit reports (Experian and TransUnion, respectively), and only impact credit scores based on that report. 

Become an authorized user on someone else’s credit card

In some cases, if you become an authorized user, the credit card company will report the entire account history to the credit bureau under your name, which could instantly give you more than six months’ worth of credit history.

How long does it take to build credit in the U.S.

The amount of time it takes to build credit history in the U.S. will depend on a variety of factors, but generally it will take at least a few months for a credit report to be generated, and often longer for a credit score to be created based on that report.

Since most banks and creditors report activity to the credit bureaus on a monthly basis, it can take 30 to 60 days for a new credit account to start showing up on the credit report attached to your personal information. 

The two main scoring models in the U.S.—FICO and VantageScore—will then generate scores based on that report, on slightly different timelines:

  • FICO can generate a score after at least six months of having a credit account

  • VantageScore, another leading scoring provider, can generate a score as soon as you have a credit report. 

Keep in mind, these are only the minimum requirements. It might take months or even years to build a good credit score, so make sure to stay diligent about managing your open accounts.

The takeaway:

Whether you’re new to the U.S. or just new to credit, getting started right away can be important. The length of time you’ve managed credit accounts is a factor in your score, and having a long track record of paying your bills on time can help you qualify for the best offers and lowest interest rates. 

While it may take a few months to build your U.S. credit history and several more to get a great credit score, it only takes a few late payments to tank a credit score. Make sure to stay on top of your bills, especially if you have opened multiple accounts simultaneously, and ideally pay off your balance in full to avoid paying interest on your balance.

If you’ve recently moved from certain countries, Nova Credit lets you use your foreign credit history from certain countries to apply for great credit cards, phone plans, and more products using your hard-earned credit history from back home—rather than needing to start from scratch. 

Currently, Nova Credit serves individuals coming from Australia, Brazil, Canada, Dominican Republic, India, Kenya, Mexico, Nigeria, Philippines, South Korea, Spain, Switzerland, and the U.K.

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