Rebuilding credit can take some time and provide plenty of frustration, but how to go about doing it is no secret. Above all else, you need to follow these five simple steps:
Double-check your credit report & score. It’s important to make sure there are no errors on your report and to know exactly where you’re starting from.
Pinpoint the problems. The cause of bad credit is often quite clear: a charge-off, foreclosure or bankruptcy, for example. But other problems aren’t so obvious, which makes checking your WalletHub’s Credit Analysis page essential. Knowing what’s wrong will make it easier to treat your credit’s ailments.
Maximize the good news. Rebuilding credit is a matter of both waiting and fighting back. It may take years for negative records to come off your credit report, but you can dilute their impact in the meantime by adding positive information on a monthly basis. The best way to do that is to keep an open credit card in good standing by making on-time bill payments, if you use it to make purchases at all. And a secured card is without a doubt the best type of credit card to use for rebuilding credit.
Make a plan for pending problems. Paying off collection accounts, making up missed payments on a delinquent account, and negotiating a repayment plan with a lender or debt collectors are all examples of steps that you can take to limit the damage caused by lingering issues.
Build a safety net. An emergency fund is an asset when rebuilding credit, as it helps you avoid ending up right back where you started if you get blindsided by a financial emergency. But that’s not the only way to prevent history from repeating itself as far as bad credit is concerned. You may also want to brush up on your budgeting and set up automatic monthly payments from a bank account.
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