How to Rebuild Credit in 7 Easy Steps

How to Rebuild Credit in 7 Easy Steps

Everyone makes mistakes, but knowing that may not help you feel better about your poor credit score. Whether you missed some payments, went through a bankruptcy, or there’s an error on your credit report, the good news is that your credit doesn’t have to stay that way.

Your credit history is essentially a report card that shows how well you manage credit and debt, and as you establish better credit habits, negative items start to have less of an impact on your credit score.

What is a good credit score?

It can be hard to know where your credit stands if you don’t know how the grading system works. To help, here’s how FICO score ranges work:

  • 800 to 850: Exceptional
  • 740 to 799: Very good
  • 670 to 739: Good
  • 580 to 669: Fair
  • 300 to 579: Poor

How to rebuild credit

To help you get your credit back on track, we’ve put together a list of seven steps you can take that can start to impact your score sooner than you think.

1. Check your credit score

If you don’t already know your credit score, check it now. Credit monitoring services like Credit Karma and Discover Credit Scorecard offer free access to your credit score, plus a report on why it is the way it is.

For example, it may tell you that you have too much debt, or you have a number of late payments on your record. Regardless of why your credit score is in the dumps, knowing where it is can help you track your progress.

2. Get a copy of your credit report

While your credit score is nice to know, it won’t give you all the information you need. Even a credit monitoring service can’t provide you with everything on your credit report.

A credit report can show you exactly who your creditors are and what the state of affairs is with each. With your credit report in hand, you can also check for errors or fraudulent accounts that might be hurting your credit score.

If you see one, you can call the number provided on the form to get things sorted out. Additionally, you’ll want to reach out to each credit bureau to dispute the error or fraudulent item. If you need help, consider reaching out to credit repair companies who can do some of the legwork for you.

You can get a copy of each of your three credit reports for free every year at Avoid getting all three at once, though. Instead, spread them out over the course of a year to make sure you can keep an eye on your accounts more than just once a year.

3. Get caught up on your payments

If you’re behind on any payments, get caught up as soon as possible. The longer a bill goes unpaid, the more it will hurt your credit. So, start by getting up to speed with later payments, then work on payments that aren’t as late. The sooner you do this, the better.

If you’re having trouble getting caught up on payments, call each of your creditors to explain the situation. They may be able to help you get on a payment plan that won’t have as much of a negative impact on your credit.

If you have any accounts that are already in collections, work on paying those off as soon as possible. While paying off a collection account won’t necessarily have a huge impact on your credit report, it can prevent it from causing further damage to your score.

4. Pay down some debt

How much you owe is the second most important factor in your FICO credit score, making up 30% of the score’s calculation.

The more debt you have, the more it will impact your credit score negatively. More specifically, you’ll want to tackle your credit card debt. Your credit utilization, which is calculated by dividing your credit card balance by your credit limit, should stay under 30% (the lower, the better).

So, if you have $10,000 on a card with a $15,000 balance, your credit utilization is at 67% and could be hurting your score.

To help pay down your debt, consider a balance transfer credit card or debt consolidation loan. As a last resort, you can also look into credit counseling or a debt management plan.

5. Start establishing a good payment history

The most important factor in your credit score is your payment history, which is why your score could be poor because of missed payments.

Once you’re caught up with all your late payments, start establishing a good payment history again. If you already have a credit card, you can use that card to do it. If not, consider applying for a secured credit card.

Using credit cards to build credit is the cheapest way to reach your goal, as long as you don’t spend more than you can pay off at the end of each month. As long as you pay off your balance on time and in full, you can establish a positive payment history without paying any interest.

6. Avoid borrowing unless necessary

Every time you apply for credit, the lender makes a hard inquiry on your credit report, which can knock a few points off your credit score. If you apply for credit multiple times in a short period, that negative effect could be compounded.

So, unless you absolutely need to borrow money, don’t.

7. Be patient

Whether or not you’ve already started on these steps, you might be wondering, “How long does it take to rebuild credit?” The answer to that question is a bit tricky.

While some of the things you do to rebuild your credit can show results within a month or two, others can take longer. FICO doesn’t share its credit scoring algorithm, so there’s no way to know for sure how certain factors may impact your credit score.

What’s more, everyone’s credit report is different, so there are hundreds of factors that can affect your score. As a result, it’s crucial that you practice patience as you work to improve your credit.

The effort is worth the payoff

If you’re trying to decide if learning how to rebuild credit is worth the time and effort, we’re here to tell you that it is. Not only does your credit history influence your ability to borrow at low rates, but it can also impact your ability to get a job, an apartment, and cheap car insurance.

While it takes time and serious effort to rebuild your credit, an excellent credit score can help improve your overall financial health.

Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated July 3, 2018 but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

Our editors independently research, test, and recommmend the best products; you can learn more about our review process here. We may receive commissions on purchases made from our chosen links.
infographic: How to Rebuild Credit in 7 Easy Steps

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Article Staff

Ben is a money and travel writer living in Utah. He has spent the past 10 years studying and working in the financial industry.

Ben has written for sites such as NerdWallet, USA Today, Money,, Credit Karma, and US News.

Ben loves giving people the tools they need to improve their financial health.

When he's not writing, Ben enjoys planning his next vacation, reading, and eating chips and salsa. You can connect with him at

Editor Jenna Holtz
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