I recently graduated from college in December. I have some debt, mostly in the way of a few unpaid hospital and utilities bills and student debt, and one very low balance credit card. I am currently working, and I intend to start paying of my debts soon. How soon will it take for my credit to get better if I do this?
Credit scoring depends on too many factors for me to tell you how long it will take for your credit to improve once you start paying down your outstanding bills.
However, there are several things that you can do which should help improve your credit history. If the accounts that you refer to are already past due, it is important that you pay them off as soon as possible so they stop reporting as delinquent to the bureaus. Paying them off will not clear out the past delinquencies, so these accounts will still have a negative impact on your score, but as time passes, their influence will become less and less.
If you need help with debts, and can't afford your current monthly payments, you can apply with a Bills.com Debt Relief Savings Quote
However, just paying off these accounts will not ensure an improvement in your credit score. Paying off these accounts will reduce their negative influence, but if you have no other listings exerting a positive influence, your credit is likely to stay in the doldrums. Since you now have a regular income, you need to establish some new credit lines so you can establish positive payment history. Establishing positive payment history can be difficult for people who have had past credit problems.
If you know someone with an established credit history who will co-sign a loan with you, you may be able to obtain a loan and start building your own credit. If you cannot find someone to co-sign an unsecured loan with you, there is always the option of taking out a secured credit card. Secured credit cards require you to deposit cash in an account with the credit card bank. The credit line available on the card is equal to the amount of cash you have on deposit.
This may sound strange; why would you not just spend your own cash? However, these secured credit cards report timely payments to the credit bureaus and help you establish a credit history.
For more information about credit and ideas on how to improve your credit rating, I invite you to read different articles in our credit section.
Regardless of how you decide to work to establish a credit history, the key is to make wise credit choices and timely payments. If you follow a sound financial course, your credit should start to improve in the not too distant future.