How Long Does It Take to Build Credit With a Credit Card?

by Ciele Edwards, Demand Media
    Build credit by using and paying off your credit card.

    Build credit by using and paying off your credit card.

    Whether you're purchasing a home, signing up for a new cell phone contract or buying insurance, you need a good credit rating. Many employers even include credit checks in the hiring process. It takes time to build an impressive credit history, but making purchases on a credit card and paying off those debts in a timely manner puts you on the right path to building positive credit.

    Establishing Credit

    If you never established credit, you cannot pull and review your own credit report because a credit record does not exist in your name. Maintaining a credit card account is beneficial because it allows you to not only establish credit, but establish positive credit immediately with on-time payments.
    When you open a credit card account, the credit card company reports information about your account to the credit bureaus. The information that your creditors report creates your credit history. How long it takes to establish credit depends on when you open the account and how often your credit card company files reports. Some credit card companies report account activity to the credit bureaus every month while others send reports every 60 days.

    Improving Credit

    If your goal in building credit is to improve your existing credit score, you can accomplish that goal with a credit card, but the process is a slower one. Recent credit entries have a greater bearing on your credit scores than older information. Provided you use your new credit card responsibly, the new, positive information will gradually replace older, negative entries. Keep in mind as well that negative information generally remains on your credit report for only seven years. Because your negative entries are aging and falling off your credit history while your new credit account remains current, your credit score will continue to improve over time as you use and make payments on your new card.

    Considerations

    Obtaining a credit card isn't enough – you have to use the card regularly before you can establish good credit. That does not mean that you must submit to the credit card company's interest charges for the privilege of building a credit history. The key to protecting yourself lies in not carrying a balance. By making small purchases and paying them off in full each month, you can establish a solid credit profile without paying interest charges.

    Credit Scoring Factors

    If you've been paying your credit card bills on time each month, its easy to get discouraged if your credit report doesn't reflect the high score you believe you deserve. Even if the only data in your credit history is positive, a few months of positive reports aren't likely to give you the stellar credit rating you're hoping for.
    Your debt management skills aren't the only factor that influences your credit rating. The amount of time you've successfully managed your debts accounts for 10 percent of your score. Time is your closest ally when building a credit history. You'll need years of good credit to prove to lenders that your smart debt management skills are here to stay.

    About the Author

    Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.

    Photo Credits

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