People who never had to worry about bad credit in the past are worrying about it now. If the economy dealt you a bankruptcy, foreclosure, debt settlement, or a slew of late payments and collection accounts, you probably want to know how long it will take to recover and have good credit again. The answer? It depends.

Featured Credit Card

The problem is that making a payment on time doesn't add as many points as making it late subtracts. FICO estimates that a single late payment can drop a score by up to 80 points if you have a score of 680. Bankruptcy drops it by 130. The good news is that your more recent history is weighted heavily; your distant past is not. So even though a bankruptcy can remain on your credit report for ten years, after three or four it loses its importance.

Gina's credit cleanup plan goes as follows:

  1. Change your habits. If you have credit cards with balances, stop using them, stop carrying them, and start paying them off. Take the card with the lowest balance and pay more than the minimum -- as much more as you can. When it's gone, do the same with another card -- preferably the one with the highest interest rate. Your credit utilization (the amount of credit used versus credit available) will drop, and that can mean an improvement to 30% of your rating. Paying on time improves the payment history (35% of your rating). Try this for six months, then pull your credit report and see how much your score has improved.
  2. Get professional help. If the reason you can't pay your debts is that your interest rates are too high, a non-profit, reputable debt management / credit counseling service and help you budget and perhaps negotiate lower interest rates from your creditors.
  3. Become an authorized user. If you have family or friends with good credit, ask to be added as an authorized user on a credit account or two. You don't actually get or use the credit card (you don't even need to know the account number) but the history on that account will show up on your credit and become part of your credit score.
  4. Try a secured credit card. This is a card designed to help you rebuild credit. The fee may be steep, and you'll have to deposit cash with the creditor in an amount up to the card's limit.Make sure that the creditor guarantees to report your payment history to credit bureaus -- and pay on time religiously.
  5. Check your credit a couple of times a year. Make sure that your good behavior is being reported accurately. If you discharged accounts in a bankruptcy, make sure they show up that way on your credit report.
  6. Know your time frames. If you want to apply for a mortgage, know that FHA will consider your application if at least three years have passed since a foreclosure, or two since a bankruptcy. You can even get a mortgage within one year of bankruptcy if your credit prior to filing was excellent and the filing was due to events beyond your control, such as a mass layoff at your company or a serious illness. If your credit was less damaged, try applying once you have successfully paid your bills on time for at least a year. If your only damage is a late payment or two, make payments on time for at least six months before applying for a new mortgage.

While it may seem that it takes a long time to clean up a credit history, remember that time is going to pass anyway. And three years from now you can be sitting on a good credit rating, or you can still be a problem child -- but three years older.