How To Rebuild Your Credit

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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It’s relatively simple to establish credit, but rebuilding it after a series of missteps is another story. The good news is a less-than-perfect credit score isn’t the end of the world. And with the right actions, you can start seeing improvements sooner rather than later. 

Before you start rebuilding your credit, you should first understand how your credit score is calculated to know what areas of your credit report to focus on. 

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How Your Credit Score Is Calculated

The FICO-scoring model is used by 90 percent of lenders and creditors to make lending decisions. It consists of five components: 

  • Your Payment history (35 percent of the credit score): Do you make timely payments on your outstanding debt obligations? A single late payment could tank your credit score. However, creditors and lenders won’t report delinquent accounts until at least 30 days have passed. Collection accounts from unpaid bills also mean bad news for your credit score. 
  • Amounts owed (30 percent of your credit score): How much of your credit limit is currently in use? Also known as your credit utilization rate. You want to keep it at 30 percent or lower – 10 percent or lower is even more ideal for achieving a good or excellent credit rating. 
  • Length of credit history (15 percent of your credit score): How long have you used credit? The FICO-scoring model factors in the average age of your credit accounts. 
  • Credit mix (10 percent of your credit score): Do you have a combination of revolving (i.e., credit cards) and installment (i.e., personal loans, student loans, auto loans) accounts? 
  • New credit (10 percent of your credit score): Each time you apply for credit, a hard inquiry is generated and can ding your credit score by a few points. Too many inquiries in a short period can hurt your credit score. 

What Is A Good Credit Score?

Below are the credit score ranges:

  • 300 – 579: Poor 
  • 580 – 669: Fair 
  • 670 – 739: Good
  • 740 – 799: Very Good
  • 800 – 850: Excellent or exceptional 

Any score between 670 and 850 means you’ll likely qualify for competitive rates on credit products. 

How To Rebuild Your Credit

If your credit score has taken a hit due to financial hardship or past missteps, there are several ways to build it back up.  

Review Your Credit Report

For starters, you want to confirm the accuracy of the information in your credit report. It’s what the credit scoring models use to calculate your credit score, and inaccurate or outdated entries could be dragging your credit score down. 

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Consolidated Credit is a nonprofit with over 30 years of experience, offering credit counseling, housing counseling and financial resources.

Dispute Errors

Visit and get a free copy of your credit report from the three primary credit bureaus – Experian, TransUnion and Equifax. Highlight any errors and file a dispute with the credit bureau reporting the incorrect information. 

Pay Bills On Time

It’s vital that you pay your bills on time each month since payment history is the most significant component of your credit score. If you’re having trouble making payments, contact your lenders, credit card issuers and service providers promptly. Ask to move due dates or make other arrangements to avoid adverse credit reporting. 

Pay Off Late Bills   

When you pay a collection or charged-off account, it won’t vanish from your credit report. However, you may see an increase in your score over time. Plus, paying the balance in full instead of settling for a fraction of what’s owed looks better to prospective lenders and creditors who check your credit report. 

Get A Secured Credit Card

Secured credit cards are generally used by credit newbies or individuals looking to rebuild their credit. They operate like traditional credit cards, but you’ll make a deposit to establish your credit limit. Before applying for a secured credit card, confirm that the credit card issuer reports to the three credit bureaus.

Lower Utilization Ratio 

Pay down the outstanding balances on your credit cards to boost your credit score. If you’re struggling to pay balances off just paying the minimum, revisit your spending plan to make adjustments to free up funds to make larger payments. 

Give It Time

Your credit health will improve over time with positive debt-management habits. However, the rate at which your score increases will depend on your unique credit profile. Some consumers see an immediate improvement in their credit score when a discrepancy is resolved. Others have to wait until creditors and lenders update account information to see increases. There are also instances where it could take several months of timely payments before your credit score changes. 

Ultimately, you want to focus on adding positive information – like timely payments – to your credit profile to diminish the impact of negative information that’s reported. It’s equally important to keep your balances on revolving accounts low and only apply for credit as needed.

How Long Do These Items Stay On Your Credit Report?

As you work towards rebuilding your credit, you should know how long items that could negatively affect your credit score remain on your credit report. 

Missed Payments

Payments that are missed by more than 30 days will reflect on your credit report for seven years from the initial date the payment was missed.


Collection accounts stay on your report for seven years following the original date of delinquency. 

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy remains on a credit report 10 years from the filing date. 

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy lingers for seven years after the filing date. 

Hard Inquiries

Hard inquiries, which are generated when you apply for credit, sit on your credit report for two years. However, they generally only affect your credit score for six months.

Where To Get Professional Help

It can be challenging to rebuild your credit if you have a hefty amount of debt and struggle to cover everyday expenses. Or maybe you lack access to resources to help you understand how to manage debt more effectively. 

Either way, it’s worth reaching out to a reputable credit counseling company, like Consolidated Credit, for assistance. It offers free credit counseling and access to a vast financial education center full of resources to get your finances back on track. 

Call (844) 326-6202 to speak with a certified debt counselor or simply fill out this form. They’ll review your finances with you and help you develop a plan of action to overcome your challenges with debt.

Consolidated Credit has provided free credit counseling to over 10.2 million people and consolidated over $9.75 billion in debt. They can help you do the same.

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