How to Rebuild your Credit

Rebuilding your credit can be tougher than starting at no credit. The goal is to to show lenders and credit card issuers that despite slip-ups on your part or disasters you had nothing to do with, you’re very likely to make future payments as agreed.

Before you begin to rebuild credit, it’s important to know where your starting point is. Your credit score might not be as bad as you think. You can view your credit report once a year here, and track it. Once you know where you stand, you can begin to set some small, achievable goals for yourself.

The good news is, it’s possible to make significant progress quickly when you’re starting at the low end of a credit score. Even incremental improvement may give you better financial options than you have now.

Start by making sure errors on your credit reports aren’t holding you back. Correcting a big mistake in your report has the potential to add points quickly. If you’ve received a deferral related to the coronavirus pandemic, it’s important to check to be sure it’s being reported correctly. Checking your credit reports will also help alert you as to whether or not you’ve been a victim of identity theft.

  • Go to to get a free copy of your credit reports. The three major credit reporting bureaus are offering free weekly reports through April 2021.
  • Make sure the information is correct. Look especially for accounts, amounts or addresses that you don’t recognize.
  • If you find an error, dispute it.

Then consider these six basic strategies for rebuilding credit:

1. Pay on time

Pay bills and any existing lines of credit on time. Paying only the minimum is fine, if that’s all you can manage. If you see it’s not possible to pay at least minimums, contact your creditor to see if other arrangements can be made. Late payments stay on your credit reports for up to seven years, so these take longer to recover from than other credit issues. If bills have already gone to collections, prioritize the ones where your account is still open.

2. Don’t use all of the credit extended

The amount of credit you use has a powerful effect on your credit score — only paying the minimum on time matters more. Experts recommend using no more than 30% of the limit available on any card, less is better for your score. Check the credit utilization for all your credit cards and focus on bringing down the highest ones. As soon as your credit card issuer reports a lower balance to the credit bureaus, your score will begin to rise.

3. Get a secured credit card

If your credit card accounts have been closed, you may need to start over with a secured credit card, these cards require a deposit upfront. That deposit is typically your credit limit, but then they work like any other credit card. Choose one from an issuer that reports payments to all three major credit-reporting bureaus.

4. Secure a loan

A credit builder loan has one purpose: to help you improve your credit score. You’re most likely to find one at a credit union or community bank. You’ll need to be a member or customer, and you’ll have to show proof of income and ability to repay. The lender holds onto the money as you repay, then releases it to you once you have fully repaid the loan. Your payments are reported to the credit bureaus, so be sure to pay on time.

5. Become an authorized user

You can ask someone to add you as an authorized user on a credit card. Your credit benefits just from being on the account; you don’t have to make any charges or access the account. A few cards allow primary cardholders to set spending limits for authorized users which could make the account holder feel more comfortable about adding you. You can also ask someone to add you without actually giving you a card or card number.

6. Get a co-signer

If you’re having a hard time getting access to credit, ask a family member or friend to co-sign a loan or credit card. Bear in mind that not responsibly repaying the debt on time will negatively impact the co-signer’s credit as well so if you are fortunate enough to find someone willing to co-sign be sure to make all of your payments on time.

How long will it take to rebuild my credit?

You can begin repairing things right away. You should begin to see improvement as soon as you start accumulating positive credit information to help counter the big negatives. If you need assistance call our office for credit repair information and strategies.

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