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How Long Does It Take To Fix Credit

8 min read

how long does it take to fix credit

Written By

Nick Saraev
Nick Saraev

Imagine you're ready to make a life-altering purchase—a cozy home, a reliable vehicle, or perhaps the seed money for your entrepreneurial dreams.

In Canada, it can all come down to one small figure, a three-digit credit score that can have a massive impact on these aspirations. Spanning from 300 to 900, a credit score is a gatekeeper to your financial possibilities.

The average Canadian's score sits around 650, deemed as "fair," placing many at a critical crossroads. A score of 760 or above is categorized as excellent, opening up a world of opportunities and favourable lending terms.

What if your credit doesn't measure up to these benchmarks? That's where the journey to credit improvement begins.

What is a Bad Credit Score?

In the realm of Canadian finance, the credit score range is the numerical expression of your creditworthiness, ranging from 300 to 900. Here's a breakdown:

  • Excellent (Scores 760+): This is the gold standard, signifying to lenders that you're at the pinnacle of reliability, often resulting in the most favourable interest rates and terms.

  • Very Good (Scores 759 – 725): Falling in this range still places you in a strong position to negotiate better deals with confidence.

  • Good (Scores 724 – 660): With a score in this bracket, lenders view you as a dependable borrower, though you may not snag the lowest rates.

  • Fair (Scores 659 – 560): Here, you're seen as a moderate risk, which might lead to higher interest rates and may limit your borrowing options.

  • Poor (Scores 559 – 300): Scores within this range can signal red flags to potential lenders, possibly leading to loan rejections or steep borrowing costs.

Navigating life with a bad credit score can mean facing roadblocks, from steep interest rates to reduced financial opportunities, affecting essential aspects of life like housing and transportation.

If your score isn’t as high as you would like it to be, it’s not the end of the line. A credit score isn’t set in stone; it can be repaired with the right approach but can take some time. Read on to find out just how long will it take to fix credit scores.

How Long Does It Usually Take to Fix Credit?

When embarking on the path to credit recovery, it's important to set realistic expectations. Repairing your credit is akin to training for a marathon, requiring dedication and time.

The answer to "How long to fix credit?" is not straightforward. It's a personalized timeline that hinges on individual financial circumstances and history.

Understanding the credit landscape is crucial, and in Canada, Equifax and TransUnion stand as the twin pillars that hold your credit history. These bureaus only consider financial transactions and events within Canadian territory, shaping your credit profile.

Every financial move you make is noted by these agencies, with significant activities and inquiries potentially taking anywhere from 30 to 90 days to reflect on your credit report. This lag is a key factor to remember when anticipating changes in your score.

When in the process of boosting your credit score, you need to be patient. While a few weeks of responsible spending and debt payment is a healthy step in the right direction, you’ll find it’s unlikely to dramatically change your score for the better.

Having a good grasp of Canadian credit scores, and how they work is an essential element in understanding that credit repair is a marathon, not a sprint.

Positive actions, such as timely payments and wise credit utilization, must become habitual. For those starting from a point of financial difficulty, a noticeable improvement can manifest within 3 to 6 months of consistent, responsible credit behaviour.

Transcending to an excellent credit score—especially if you’re starting with a score that's considered poor—might take years of disciplined financial management.

During the initial stages, it’s also vital to know how fast your credit score can go up. Small wins will bolster your journey in the early days.

For example, reducing your credit card balance can shift a key component of the credit score—your utilization ratio, into positive territory.

The most important mindset to cultivate during this process is the realization that a credit score is something set in stone. It’s a dynamic score that changes in response to your financial decisions.

Each and every payment you make, every account you open, and every line of credit you responsibly manage all contribute to changing your score for the better.

For those seeking to pave the road to improving credit scores, it's also important to educate yourself on effective strategies. Resources like how to improve your credit score can offer invaluable advice on taking actionable steps towards a better financial future.

In essence, a credit score is a lifelong journey that mirrors your financial habits. It can pivot to your favour with prudent, informed, and disciplined financial actions over time. Remember, credit repair doesn't happen overnight, but with a clear understanding of the process and a commitment to change, the climb from a bad credit score to a good—even excellent one—is entirely possible.

Tips to Fix Credit Quickly

While there's no quick fix to perfect credit, certain strategies can accelerate the repair of your credit score. Here’s how to effectively nudge those numbers in the right direction:

  1. Regularly Check Credit Reports: The cornerstone of credit repair is ensuring the accuracy of your credit report. Vigilantly monitor your report and promptly dispute any errors. Consistent oversight can prevent and correct score-damaging inaccuracies. Understand the full spectrum of your credit report by starting here.

  2. Pay Bills On Time: Consistent, on-time payments are crucial. They lay a foundation of trust with lenders. Automate your payments or set reminders to ensure punctuality and maintain a clean payment history, which is a vital component of your credit score.

  3. Reduce Credit Utilization: Low credit utilization signals to lenders that you’re a responsible borrower. Aim to keep your balances well below 30% of your credit limits. This can demonstrate to lenders that you don't rely solely on credit for your financial management.

  4. Limit New Credit Inquiries: Be mindful of how often you apply for credit. Frequent hard inquiries can suggest risk to lenders. It’s important to apply only when necessary, as each hard pull can slightly decrease your credit score.

  5. Consider a Secured Credit Card: A secured credit card is an excellent resource for those rebuilding credit. For example, the KOHO line of credit for credit building allows you to show creditworthiness by using a card backed by your own funds, which minimizes the risk of accruing unmanageable unsecured debt.

  6. Increase Credit Limits: If your payment history is strong, you might be eligible for increased credit limits. This can positively influence your credit utilization ratio, provided your spending does not also increase. Products like KOHO's credit-building tools can assist in demonstrating to creditors your ability to manage more credit effectively.

  7. Diversify Credit Types: A mix of credit types, including revolving and installment credit, can show lenders your ability to manage various credit arrangements. This variety is seen as a positive indicator when managed well.

  8. Address Outstanding Debts: Pay down debts strategically, focusing on high-interest and large balances first. Lowering your overall debt as quickly as possible can lead to improvements in your credit score.

  9. Stay Patient and Persistent: Fixing a credit score is a marathon, not a sprint. It’s about long-term habits and consistency. Your commitment will pay off over time, reflecting a true change in your financial health.

  10. Seek Professional Help: When the path seems daunting, professional advice can provide the roadmap to credit repair success.

Repairing your credit score consists of small steps that ultimately build upon each other. Embrace these practices, and over time, you'll see your efforts manifest in a stronger, healthier credit profile.

KOHO Credit Building Guides: Your Financial Growth Partner

Embarking on a credit-building journey can feel like navigating a labyrinth, but KOHO's credit-building subscription is designed as your guide, ensuring you’re never wandering alone.

Tailor-made for those who might not fit into the conventional banking framework—like enterprising young adults, new Canadians, or anyone recovering from financial hiccups—KOHO stands as a beacon of inclusivity and support.

With the KOHO platform, you'll gain insight into your credit improvement journey, witnessing your monthly credit score updates and tracking your progress over time. It's not just about the numbers, it's about understanding and managing your credit with confidence.

Our array of resources at KOHO Learn provides you with the financial education you need to make empowered decisions. We demystify the complexities of credit scores and offer actionable advice to set you on a path of continuous improvement.

To cater to your specific needs, compare our subscription plans on KOHO Accounts. Each plan is crafted to support your financial goals, whether you're seeking to maximize savings, build credit, or both.

New to Canada? No problem. KOHO acknowledges the unique challenges you face. Our dedicated resources for new Canadians ensure you have the financial tools and knowledge at your disposal to start building a strong credit history from the get-go.

By choosing KOHO, you’re partnering with a financial platform that champions your growth every step of the way.

So why wait? Start writing your success story and join the KOHO family today.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Nick Saraev

Nick is a freelance writer and entrepreneur with a particular interest in business finance. He's been featured in publications like Popular Mechanics and Apple News

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