How Fast Can You Repair Your Credit? These Factors Matter Most

Building your credit is already a long-term process. Repairing bad credit after your score has taken a hit, whether you’ve missed a single payment or declared bankruptcy, can seem even more daunting.

Fortunately, you can rebuild your credit even after these negative impacts. There’s no one-size-fits-all credit repair plan, though, and the time it takes to bolster your credit depends on a few main variables.

What Credit Problems Do You Have?

Different problems and events harm your credit score in different ways. Some situations cause more damage than others, and certain items remain on your credit reports for longer. 

Hard Inquiries

• Time on credit report: 2 years

Hard credit inquiries occur when you apply for credit and a lender checks your credit reports. Hard inquiries generally have a negative but minor effect on your credit score. An inquiry here and there is normal and shouldn’t be a concern, but too many credit applications within a short period of time can cause a more severe hit. 

Regardless, hard inquiries only remain on your credit reports for two years, and your scores will likely start recovering well before that. FICO scores, for example, only consider inquiries from the prior 12 months.

Late Payments

• Time on credit report: 7 years from when the account is first reported past due

Late payments that are addressed within 30 days generally won’t harm your credit. Left any longer, however, a late payment will usually reach your credit reports, hurting your scores. How much damage, and how long it drags your scores down, varies based on just how late the payment is. A 90-day-late payment will hurt your scores worse than a 30-day-late payment that has since been settled.

No matter the severity, though, this damage is temporary. A late payment is fully removed from your credit reports after seven years. And over the course of those seven years, the impact of the late payment should become less severe.

Charged-Off Accounts

• Time on credit report: 7 years from the first missed payment

A charge-off is when a creditor acknowledges an unpaid debt as a loss. It’s basically a debt that the lender has totally given up on recouping (though you’re still legally obligated to pay it). Charged-off accounts can seriously damage your credit score, likely more significantly than a missed payment would, but much less than bankruptcy. 

A charged-off account will remain on your credit reports for up to seven years from when you first missed a payment that led to the delinquency. The impact will generally decrease over time.

Collection Accounts

• Time on credit report: 7 years from the first missed payment

Debts that are charged off by lenders are sometimes sold to collection agencies. These debts are then typically reported to the credit bureaus as collection accounts.

Collections can hurt your credit score, though not always. Scoring formulas generally treat collections differently based on their severity, and some neglect smaller collection accounts entirely.

Like charge-offs, collections stay on your credit reports for up to seven years from the date of your first missed payment, lessening in impact as time passes.

Bankruptcy

• Time on credit report: 10 years from filing date (Chapter 7) or 7 years from filing date (Chapter 13)

You could argue that bankruptcy is the “final boss” of credit issues. It’s generally pursued when one’s debts have grown so much that they simply can’t be repaid. Naturally, it’s not something lenders want to see.

There are two main types of bankruptcy for consumers: Chapter 7 and Chapter 13. Both will severely damage your credit. Chapter 7 stays on credit reports for up to 10 years from your filing date, while Chapter 13 will be removed after seven years.

Bankruptcy can devastate your credit, but the impact is still temporary, and will lessen over time. You may see your credit scores rebound quite a bit in just a few years if you build up new positive activity, although the bankruptcy record will remain on your credit reports for lenders to see for some time.

How Much Time Has Passed?

While the healing powers of time are often debated, time does heal your credit—as long as you don’t continue to accumulate negative activity.

The effect of a negative item on your credit score is typically the worst right when it’s added to your credit reports. Over time, the negative impact of that item generally decreases. It’s difficult to create a timeline with precision, though, since there are so many different factors at play within your credit profile.

It’s possible to come back from even the most egregious credit troubles over time. But it’s also essential to avoid more negative impacts to your credit. The passage of time doesn’t matter if you continue to miss payments or accumulate delinquent accounts—your credit score will continue to suffer.

How Much Positive Credit Activity Do You Have?

Positive credit activity can help offset past credit issues. If you’ve spent a decade making on-time payments across various credit accounts, you’ll likely find it easier to recover from a missed payment than someone who has a long history of delinquencies. You may even see growth within a few months.

However, if missed payments are commonplace for you, it could take several years of positive, consistent credit use before you see significant progress.

The Bottom Line

Though credit problems can feel stressful and all-consuming, it’s crucial to remember that these issues are fixable. Time can help soften the impact of your financial mistakes, and strengthening your credit management skills can make it easier to avoid trouble in the future.

All told? Coming back from credit issues generally takes anywhere from several months to a few years (or sometimes more). 

But the effort and patience required can pay off, making it considerably easier to achieve key financial milestones that often require borrowed money, like buying a home.