Tips on rebuilding your credit
Learn how to help rebuild your credit score.
If you’re working to rebuild your credit, you’re not alone. According to the Consumer Financial Protection Bureau, nearly 1 in 4 adults with a credit score in the U.S. have what’s considered a poor credit score. This generally means a score of 580 or below. The good news is, with a little work, planning and responsible financial behavior, you should be able to improve your credit score.
And, with a healthier credit score, you could make yourself more attractive to lenders when you apply for things like mortgages, car loans and credit cards.
7 ways to help rebuild credit
An important first step in rebuilding your credit is having a plan. And while every person’s situation is different, there are some helpful strategies to consider.
Here are seven tips that could help you rebuild your credit.
1. Review your credit report
Your credit score is affected by a number of factors. So knowing what’s on your credit report will help you figure out exactly where you stand. Your credit score can give you a general sense of your creditworthiness. But your credit report can offer much more detail.
A good first step is requesting a free annual credit report from each of the three major credit bureaus: Equifax®, Experian® and TransUnion®. If there are errors on your report, they could negatively affect your credit score. But you have the right to dispute errors or incomplete information on your report.
2. Pay your bills on time
Paying all your bills on time may be easier said than done. But your payment history is a main driver of your credit score. And negative information in your payment history—like missed or late credit card payments—could affect your credit score for years. Missing payments could have other consequences too, like late payment fees.
But older negative information may count less than more recent information. So the longer you pay your bills on time, the better it is for your payment history. And the better it could be for your credit score.
You might consider setting up a budget, automatic payments or reminder alerts to help you keep up with your bills. And making at least the minimum payment on credit accounts—like your credit card—will keep your accounts current and in good standing. But keep in mind that paying only the minimum could have other negative effects on your credit score.
3. Catch up on overdue bills
If you have bills that weren’t paid on time and are past due, you’ll want to get caught up. And if you’ve fallen behind on your credit card payments, there are several steps you can take to get caught up again.
You could also consider contacting your lenders if you’re struggling to keep up with your bills. They might be able to help you with a payment plan. And if you’re a Capital One customer and having trouble making payments, you should contact Capital One directly to discuss potential options.
4. Become an authorized user
If you have a loved one or someone you trust with a good credit score, they can add you as an authorized user to their account. This allows you to make purchases. But the primary account holder is ultimately responsible for payments. And their responsible use can help build your credit and boost your score. Plus, there’s generally no credit check or need to apply in order to be an authorized user.
Be sure to check with the card issuer to see how they handle reporting authorized users to credit agencies.
5. Consider a secured credit card
As you’re working your way to better credit, a secured credit card may be helpful. You can make purchases with it, just like a traditional credit card. But it’s considered “secured” because it requires you to put money down as a security deposit to open the account.
When you have a secured card, some credit card companies like Capital One report your status to the credit bureaus. So if you’re paying at least your minimum payment on time and using your card responsibly, it could help you improve your credit.
6. Keep some of your credit available
How much of your available credit you use is also called credit utilization. This is important, since keeping your credit utilization below about 30% can show you’re managing your credit responsibly and not overspending.
7. Stay on top of your progress
As you work on building up your credit score, consider getting a credit monitoring tool like CreditWise from Capital One. It’s a free tool that everyone can use—not just Capital One customers. You’ll get alerts when there are meaningful changes to your TransUnion credit report. And you can always see your VantageScore® 3.0 credit score to keep an eye on your progress.
How long does it take to rebuild credit?
Rebuilding credit can take time. And just how long it takes to rebuild credit depends on your circumstances. Things like your current score, factors affecting it and more all play a part in how long it takes to rebuild credit.
The good news is most things won’t impact your score forever. And the effects of negative factors may lessen over time. Being patient and forming good habits can eventually pay off in the long run!
Credit cards and rebuilding credit
Even if you’re just starting out, it may be worth researching credit cards. With responsible use, you could use a credit card to help rebuild your credit. Capital One offers secured and traditional credit cards for people with fair credit, as well as a secured card for those rebuilding their credit.
If you’re unsure which card might be a good fit, you can find out first whether you’re pre-approved for some Capital One credit cards. This takes just 60 seconds and doesn’t impact your credit score.
Remember, building better credit takes a little time. But it’s possible with responsible financial behavior. And it’s never too late to get started.
Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention.
Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.
Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. Your CreditWise score is a good measure of your overall credit health, but it is not likely to be the same score used by creditors. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.
CreditWise Alerts are based on changes to your TransUnion and Experian® credit reports and information we find on the dark web.