How Long Will It Take to Get New Credit | Credit 101 Ep. 154

The time it takes to get new credit can vary widely based on the type of credit you’re applying for, your financial situation, and the lender’s process. Here’s a breakdown of the general timelines for different types of credit:

1. Credit Cards

• Application Process: Typically takes a few minutes to complete an online or in-person application.
• Approval Time: Instant approval is possible for many credit cards, but it can take 7-10 business days if additional information is needed.
• Receiving the Card: After approval, it usually takes 7-14 business days to receive your new credit card by mail.

Total Time: 1-3 weeks

2. Personal Loans

• Application Process: Completing the application can take from 10 minutes to an hour, depending on the lender’s requirements.
• Approval Time: Pre-approval can be instant, but full approval may take 1-7 business days as the lender reviews your credit, income, and other factors.
• Receiving Funds: Once approved, funds can be disbursed within 1-5 business days, either by direct deposit or check.

Total Time: 3-12 business days

3. Auto Loans

• Application Process: Applying for an auto loan at a dealership or through a lender can take from 30 minutes to a few hours.
• Approval Time: Approval can be instant at a dealership, but if applying through a bank or credit union, it may take 1-3 business days.
• Purchasing the Vehicle: Once approved, you can usually complete the purchase within the same day to a few days.

Total Time: 1-5 business days

4. Mortgages

• Application Process: Completing a mortgage application can take several hours, including gathering required documentation.
• Approval Time: Pre-approval can take 1-3 business days. Full approval, which includes underwriting, can take 30-60 days as the lender verifies all information and appraises the property.
• Closing: After approval, closing on the mortgage can take an additional 30-60 days.

Total Time: 30-90 days

5. Home Equity Loans or Lines of Credit (HELOCs)

• Application Process: The application can take several hours, including providing documentation of home value and income.
• Approval Time: Approval typically takes 2-6 weeks as the lender conducts an appraisal and underwriting process.
• Receiving Funds: After approval, it may take a few more days to receive the funds.

Total Time: 2-8 weeks

Factors Influencing Approval Time

1. Credit Score and History: Strong credit can lead to faster approval times, while issues on your credit report may slow the process.
2. Documentation Preparedness: Having all necessary documentation ready can speed up the process. This includes proof of income, identification, and any other required paperwork.
3. Lender Efficiency: Different lenders have different processing times. Some may offer faster approvals, especially online lenders, while traditional banks may take longer.
4. Type of Credit: As shown above, the type of credit you’re applying for significantly affects the timeline.

Tips to Speed Up the Process

• Check Your Credit Report: Ensure there are no errors and that your credit score is as high as possible before applying.
• Gather Documentation: Have all necessary documents ready, including proof of income, identification, and any other required paperwork.
• Apply Online: Many lenders offer faster approval processes for online applications.
• Pre-Approval: Seek pre-approval where possible to get a better understanding of your chances and speed up the final approval process.

Conclusion

The time it takes to get new credit depends on various factors, including the type of credit, your financial situation, and the lender’s processes. By being prepared and understanding the specific requirements of each type of credit, you can streamline the application process and obtain the credit you need as quickly as possible.