How to Rebuild Your Credit

Rebuilding your credit is a journey, and we are here to help. With a clear plan, you can improve your credit and create a better financial future. Here’s a step-by-step guide to help you get started.

Step #1: Pull Your Credit Report
Start by obtaining a free credit report from all three major credit bureaus at www.annualcreditreport.com. This is the ONLY place that you should go to get a free copy of your credit report—Watch out for other websites that may be a scam.

Once you’ve got a copy of your credit report, identify the negative marks. These could be late payments, significant credit card debt or items in the derogatory sections (Charge-offs, unpaid child support or items in collections). Understanding the negative marks on your credit report will help you understand how to rebuild your score.

Step #2: Contact Your Lenders
If you’re struggling to keep up with your monthly payments, reach out to your lender(s) and ask for help. Payment programs may be available to help you manage your debt in trying times. These options may include skipping a payment to catch up on other bills, making a partial payment, or extending payment terms to make your monthly payment more manageable.

Step #3: Explore Debt Consolidation Loans
If you have high-interest loans or credit cards, a debt consolidation loan can make things simpler. These loans combine your current debts into a single, fixed monthly payment with a potentially lower interest rate. They are designed to help you take control of your budget so you don’t feel squeezed every month.

Step #4: Investigate and Resolve Collections
According to the Consumer Financial Protection Bureau, 23% of Americans have collection items on their credit file . Resolving them is an important step in rebuilding your credit. Start by making a list of the services you pay for, like a cell phone plan, and any time you’ve been a co-signer or received medical bills in recent years. Then, even if you aren’t sure what collection items are, call the collectors. Ask what the items are, set up payment plans or negotiate to pay a lower amount.

Step #5: Dispute Resolution
Once you know an item is up-to-date or paid off, dispute it on your credit report. Disputing items helps the credit bureaus investigate and remove negative remarks. You can also ask the lender or debt servicer when they will report item as resolved. Both methods ensure you have control of the situation, instead of waiting for a third party.

Step #6: Use a Secured Credit Card
After resolving your previous debts, you’ll be ready to apply for a small amount of credit. A secured credit card is a great place to start. You’ll deposit some cash into a savings account, where it will be held to “secure” the credit card you’ll receive. By keeping your credit card balance below 30% of your available credit and paying on time, you’ll demonstrate healthy financial habits and begin to raise your credit score.

Step #7: Keep Monitoring
As you rebuild your credit, it’s important to regularly monitor your FICO® Score, credit report and maintain good financial habits. Rebuilding takes time and patience, and by staying consistent with these steps, you can gradually improve your credit and achieve better financial stability.

¹ https://files.consumerfinance.gov/f/documents/cfpb_market-snapshot-third-party-debt-collections-tradelines-reporting_2023-02.pdf