The Credit Guy

How quickly can I raise my score after years of inactivity?


Raising your credit score after years of credit inactivity takes time and consistency. Start by opening a new credit card and using it for daily expenses, like groceries and gas

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Dear Credit Guy,
I went to my bank today to get preapproved for a home loan. Due to inactivity on my credit report, all credit agencies could not calculate a credit score.

The last loan I paid off was an auto loan from August 2015. If you were to look at my credit report from August 2015 and beyond, my credit score would have been in the 700s to 800s.

The loan officer I spoke with suggests I get a credit card and build my credit.

If I get a credit card and make one payment, will this raise my credit score into the 700s-800s? If my score won’t reach that point, how high would you estimate it could get? How will my previous history affect my credit score? – Jon


Dear Jon,
I believe your loan officer has given you some good advice, but I also think you may be a little optimistic about how soon you will see a change.

Credit scoring models require several months of payment activity to generate a score, so getting a credit card and making one payment will probably not be sufficient to even generate a score, much less show a score in the 700-800 range. These scores fall into the good-to-excellent range.

Establishing and then maintaining accounts is how the credit scoring models predict your creditworthiness. This is why it is so important to pay your bills on time, every time.

Current versus old activity
Certainly, your previous history will come into play, but that is not nearly as important as what you are doing currently with your accounts. Life happens and circumstances change, making what was done in the past somewhat irrelevant when it comes to securing new debt.

You should certainly apply for a credit card and start using it right away. But keep in mind that new accounts can initially lower your credit score, rather than raising it, due to the impact of every hard inquiry on your credit.

It will probably take a few months of on-time payments for your new account to positively affect your credit score.

  • Once you have your credit card, know what your credit limit is and stay well below that. Credit utilization – the amount you have borrowed compared to your credit limit – is another important factor in credit scoring. The lower you can keep your credit utilization, the better it will be for your score.
  • I suggest that you not carry a balance forward, but pay off the balance every month.
  • Use your card for purchases that you will make anyway, such as groceries or gas.

Keeping a low credit utilization ratio
You can access more of your available credit if you make payments more than once a month. Remember that any time your credit score is accessed, what is seen is what your credit looks like at that moment in time.

If you have a $1,500 credit limit and charge $750 at one time, and your credit is accessed before a payment is made, your utilization will be at 50 percent. This is likely too high and may sink your score. This is true even if you never carry a balance on your credit card.

But if you charge $750 at one time and immediately make a payment, you won’t have this problem. An added benefit to this strategy is that you will never find yourself in credit card debt and are living within your means.

This is best for both your credit score and for your overall financial health.

Video: How payment history affects your credit score

Consistency and patience
You will need to use the card every month in order to gain the benefits of building your score. You will also need to give yourself some time to get to the place you want to be in terms of your credit score.

I cannot say for sure what score you will have after using the card for six months or so, but I do believe you can get there with careful use of your card and some patience.

Once you have achieved your goal of qualifying for a home mortgage, I would suggest you keep your card open and continue to use it as outlined above.

This will demonstrate a responsible use of credit and allow your score to continue to rise over time.

Take care of your credit!

See related: 5 steps to a mortgage-ready credit profile, Rebuilding credit? Go easy on new accounts

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