The length of time it takes to rebuild bad credit depends on the individual's situation. FICO research shows that recovering from bankruptcy can take anywhere from five to ten years, depending on the credit rating. If a person is only 30 days behind on their mortgage payment, they can repair their credit in approximately 9 months to three years. Generally, it takes at least a year to recover from bad credit, provided that the right steps are taken.
The process of credit reconstruction may vary depending on the severity of the negative history that is reducing the rating. For instance, recovering from a foreclosure, bankruptcy, or court judgment may be more difficult than from a late payment. Bankruptcy stays on a person's credit report for 10 years. However, when someone declares bankruptcy by liquidation under Chapter 7, their debt-to-income ratio is immediately and drastically reduced, which could lead to an increase in their credit rating in one or two years.
It also eliminates their ability to qualify for Chapter 7 for another eight years, so potential lenders may view them as being at greater risk right away. A secured card is all that is needed to recover credit, since using it responsibly will send positive information to credit bureaus every month and improve the score. If the bad credit incident occurred years ago, they may be closer to raising their score than they think.At first, only one secured credit card should be used to rebuild credit, although having two may be considered eventually. If there are any incorrect details in the credit report, the process of correcting errors with creditors and credit reporting agencies should be started right away, which could help improve bad credit.
WalletHub's free credit score simulator can be used to calculate how a secured card could help recover credit or how adding a second card to the wallet could affect things.If a person had a reasonable credit score (a score that ranged from 580 to 660 before it fell), it might not take as long to go back from the bad credit range to the reasonable credit range. When rebuilding credit after bankruptcy, it is especially important to show lenders that they are financially responsible. A credit card can be a useful way to reverse a bad credit score, but there are other methods that can help increase the score as well. Some improvement may be seen in just one or two months, but how long the entire reconstruction process takes will depend on the initial score and the desired score.
Negative information in the credit report can be compensated for with an avalanche of positive information.