Rebuilding a damaged credit score takes time and patience, but it’s entirely possible with the right approach. Whether you’ve missed payments, defaulted on a loan, or even declared bankruptcy, understanding the timeline for recovery and adopting effective strategies can help you get back on track. Here’s what you need to know about the journey to a healthier credit score.
The time it takes to rebuild your credit depends on the severity of the setback and your financial habits going forward. Here’s a general timeline based on common credit issues:
Missed payments (30–60 days late)
Missed payments can stay on your credit report for up to seven years, but their impact lessens over time. You can start seeing improvement in your score within six to 12 months of consistent, on-time payments.
Defaulted loans or accounts sent to collections
Defaults can severely damage your score, but you may begin to see some recovery within one to two years if you consistently manage your other accounts well. Full recovery might take three to five years.
Bankruptcy
Bankruptcy is one of the most serious credit setbacks and can remain on your credit report for up to 10 years. However, you can start rebuilding your credit immediately after discharge. With responsible financial behaviour, you may notice improvement within two to three years, though full recovery could take seven to 10 years.
Regardless of the setback, the strategies for rebuilding credit are similar. Here are key steps you can take to improve your score over time:
Make consistent, on-time payments
Payment history is the most significant factor in your credit score. Ensuring that all your bills—credit cards, loans, utilities—are paid on time is essential. Even one missed payment can set back your progress, so consider setting up direct debits or reminders.
Reduce outstanding debt
Paying down your existing debt is crucial for improving your credit score. Focus on reducing high-interest debt first and aim to lower your credit utilisation ratio (the percentage of your available credit you’re using) to below 30%.
Dispute errors on your credit report
Regularly check your credit report for any errors or inaccuracies that could be dragging down your score. Dispute any mistakes with the credit bureaus to ensure your report accurately reflects your financial behaviour.
Use credit responsibly
While it might be tempting to avoid credit altogether, responsible credit use is key to rebuilding your score. Consider using a secured credit card, where you deposit a sum as collateral, or a credit-builder loan. Use these credit lines wisely, keeping balances low and paying off the full amount each month.
Limit new credit applications
Each time you apply for new credit, it results in a hard inquiry on your credit report, which can temporarily lower your score. Be selective about applying for new credit and focus on managing your existing accounts well.
Be patient and persistent
Rebuilding a damaged credit score takes time and patience, but it’s entirely achievable. While the process varies depending on the severity of the setback, the key is to remain consistent in your efforts. Here's a guide on how long it may take to see improvement and the practical steps you can take to rebuild your credit over time.
Rebuilding a damaged credit score is a process that requires time, patience, and consistent effort. By making timely payments, reducing debt, disputing errors, and using credit wisely, you can steadily improve your score. Also make sure to check out our beginner’s guide to building a credit score to check out if you’ve missed anything. While full recovery might take several years, the steps you take today will lay the foundation for a healthier financial future.
