If you've been in the habit of paying your bills late, if you're maxed out on all your credit cards, or if there's an outstanding judgment or tax lien against you, then you're probably going to need to do some remedial work on your finances to better your score, and that may take some time. How much time it takes to improve your score depends on what's wrong, notes Jo Albert, a counselor with the DuPage Homeownership Center in Wheaton. Albert adds that she always advises people to scrutinize their credit records for errors that may unnecessarily drag down their score. While removing a judgment can significantly impact a credit score, boosting it 50 points and more, if people who have been delinquent begin paying their bills on time, they may see their score rise about 20 to 40 points or so in 6 to 12 months, estimates Albert. Getting your score over 620 is the goal, since that is the benchmark most lenders use in granting their most competitively priced mortgages.
More risky borrowers have lower scores and pay higher interest rates.
Each of the three major credit bureaus collect somewhat different data on you, since they don't all gather information from the same credit card issuers, landlords and other sources. Everyone should pay their bills on time, and pay down credit card and revolving accounts. Ironically, admits Watts, it may actually be counterproductive to make financial maneuvers aimed at boosting your score. For instance, he explains, your credit score is enhanced if you use only a small portion of your available credit. Indeed, mortgage seekers used to be routinely advised to close out unused accounts before applying for a mortgage.