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.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.