Improve Your Spending Habits to Help Your Credit Score
We all know that improving your spending habits will improve your credit score, but what we really want to know is, just how long will it take to reflect favorably on our credit report?
Before I answer that, let’s first define what improving your spending habits means in relationship to your improving your credit. Essentially, we’re talking about you spending responsibly so that you live within your means, pay your bills on time all the time, and avoid incurring too much debt and maxing out your credit accounts. Improving your spending habits in this way is most likely going to relate to two specific areas of your FICO credit score — payment history and amounts owed. Approximately 35% of your credit score is based upon your payment history, and 15% of your score is based on the amounts owed on your accounts. By paying your bills on time and keeping the balances on those credit cards low, arguably at or under 30% of the available balance, you have the opportunity to influence about 50% of your credit score. The other 50% of your score is determined by things such as your length of credit history, new credit and the types of credit that you have.
So the question still remains: Once you’ve committed to making the necessary changes, how long will it take to see results?
Most creditors report to the credit bureaus every month. Therefore, if you pay down the balance of an account, the new balance should be reported to the credit bureau over the next month, and if your credit score is improved, you should see such improvement. While it’s also true that the timeliness of your payment will also be reported on a monthly basis, they’re really looking at your payments from a historical perspective over a period of time. Therefore, improving your score based on your payment history will likely occur over a period of several months. Even still, there’s no time like the present. Start improving your spending habits to improve your credit score. You should begin to see results over the next 30 to 60 days, but remember to be patient, because significant improvement will take a little time
