How to Rebuild Credit Fast: The Ultimate Step-by-Step Guide

How to Rebuild Credit Fast: The Ultimate Step-by-Step Guide

By Lizzy Martini

Could your credit score use a boost? You’re not alone—44% of Americans have FICO credit scores that are considered “bad” (350-649) or “fair” (650-699) by most lenders. If your credit score is below par, you may be wondering how to rebuild credit fast.

Bad credit makes it tough to qualify for loans and credit cards. When you are approved, it’s typically at higher interest rates—which translates to higher costs. A low credit score can also impact your ability to rent an apartment, get a cell phone contract, and, in some cases, land a job.

The good news is that there are several proven ways to rebuild credit quickly. We asked 15 financial experts for their best tips on rebuilding credit in a hurry, then compiled their responses into the ultimate step-by-step guide.

How to rebuild credit fast: A step-by-step guide

Panel of Financial Experts:

Neal Frankle, Wealth Pilgrim

John Schmoll, Frugal Rules

Philip Taylor, PT Money

LaToya Irby, The Balance

Ross Kenneth Urken, The Street

Andrew Fiebert, Listen Money Matters

Randall Yates, The Lenders Network

David Ning, MoneyNing

Shane Tripcony, Best Prepaid Debit Cards

Matt Hylland, Hylland Capital

Amy Fontinelle, Personal Finance Expert

Tiffany Aliche, The Budgetnista

Lauren Greutman, Personal Finance Expert

Maggie Germano, Financial Coach

Julia Kernei, Empowered Dollar

Step #1.  Commit to change

“Most people with bad credit are in that situation because they fell into some bad habits. And since bad habits are hard to break, you need to make a stand to make a change. Decide that from now on you are going to pay your bills on time – every time.”  Neal Frankle

“Start by being honest with yourself about why your credit is in trouble. If you have lowered your score through bad spending habits, then you must resolve to change your ways. It's a lot like going on a diet to improve your health.”  Julia Kernei

Step #2. Review your credit report

“Order a current copy of your credit report from all three major credit bureaus. Read through each credit report closely looking for errors - accounts that aren't yours, late payments that weren't actually late, accounts that should have been included in bankruptcy, etc.” LaToya Irby

“Go through your credit report and determine what it is that is dragging your score down. Is it late payments? Unresolved claims? High credit usage? You might even have errors on your credit report that are costing you valuable points unfairly. Whatever is, it’s critical to identify and understand the different problems you are dealing with.” Neal Frankle

Step #3: Dispute any errors

“If there are any errors on your credit report, contact the reporting agency to find out what's needed to remove the error.” John Schmoll

“If you discover there are errors on your credit report, take advantage of the laws that protect consumers and get those mistakes off your credit history.”  Neal Frankle

Make sure your credit limits are reported accurately. If your credit report shows a lower credit limit, ask your credit card issuer to update it with the credit bureau. Also, avoid disputing accurate negative items just because you don't want them there—they will just come back as verified.”  LaToya Irby

Step #4: Cut a deal

Ask credit card companies to waive your late fees, which can seriously tarnish your credit. If you ask them to throw you a bone, credit card companies are so hungry for your business, they’ll help you out if it’s your first or second offense.” Ross Kenneth Urken

“Some collection agencies offer what's called a ‘pay for delete’ where they agree to remove the collection account from your credit report if you satisfy the past-due balance—in some cases, for less than the amount owed. Get the agreement in writing before you make a payment—if the collection is not removed from your credit report, it will continue to hurt your score whether it's paid or not.” ? Randall Yates

Try sending a goodwill letter, which is like a pay for delete letter, but instead you request that the creditor or collector remove a paid account from your credit report out of goodwill. Briefly explain why you became so late. There's always a chance that whomever receives your letter is feeling generous and will update your account.” Andrew Fiebert

Step #5: Tackle delinquent accounts

“Rebuilding credit takes time, but the clock doesn’t start until all debt has been settled. It pays to work on settling all debt so it won’t keep on showing up on your credit report as currently delinquent.”  David Ning

“If you have accounts approaching charge-off status, bring them current before it's too late.”  LaToya Irby

“If you have unpaid bills, move heaven and earth to get those bills paid.”  Neal Frankle

Step #6:  Calculate your credit utilization

“Your open credit card balances compared to the available credit limit on each account is known as the credit utilization ratio. Your credit utilization ratio accounts for 30% of your overall credit score. If you are carrying high balances on your credit cards, your credit score will be impacted significantly.” Randall Yates

“Your goal should be to get your credit utilization under 30%. You can do that by either paying off your debt or increasing available credit.”  Neal Frankle

“If you have low credit limits or high spending, pay off your balance weekly instead of monthly to ensure you are not using too much of your credit.”  Matt Hylland

“Since only your current credit utilization is used in your credit score, once you improve it, your previously high utilization won't count against you.”  LaToya Irby

Step #7: Reduce credit card balances

Pay as much as you can towards any outstanding revolving debt you have - such as a credit card. Doing so lowers your credit utilization ratio and can increase your score in the matter of months.” John Schmoll

Pay down your lowest credit card balances first to see success sooner. And focus on paying down your debt instead of moving it around (i.e. signing up for new credit cards that offer balance transfers).” Maggie Germano

Step #8: Increase available credit

“If getting new credit lines proves challenging, consider a personal loan and/or secured credit card with an online institution, local bank, or credit union to start re-establishing your credit-worthiness.” Philip Taylor

“Unlike standard credit cards, secured cards generally don’t require a stringent credit check (you can usually have a very low credit score and still qualify). Many secured cards report how well you pay your bill to the three major credit bureaus — Experian, TransUnion and Equifax.” Shane Tripcony

“If you go the secured credit card route, make the highest security deposit you can afford to show that you can handle the responsibility of a larger credit limit.” LaToya Irby

“If you have a friend or family member with a credit card in good standing you can ask them to add you as an authorized user. As an authorized user, the entire history of the account will appear on your credit report and will improve your credit rating. The authorized user does not have to have a card, which reduces the risk to the account owner. I've seen a client's credit score increase by as much as 30 points by becoming an authorized user.”  Randall Yates

Step #9: Make small charges and pay them off

“If your score is very low or if you are just starting out, you may want to look into getting one or two store credit cards and purchasing some low-cost items and paying the card balances before any interest accrues. Store cards are typically easier to qualify for than standard credit cards, especially for those with lower credit scores.” Shane Tripcony

“Take a new or existing credit card with a $0 balance and put one small recurring bill on it, like a streaming service or your phone bill. Then, set up an automatic bill payment to pay off the credit card balance in full each month. This will create a pay-off loop that you can set and forget. For this tactic to work, you must avoid swiping your card on anything else.” Tiffany Aliche

Step #10: Pay on time, every time

“If you have a history of credit charge-offs, make sure that never happens again.” Neal Frankle

"Even if you can only afford to make the minimum payment on your credit cards each month, pay them on time, along with the other bills that get reported to the credit bureaus. If you have trouble remembering due dates, consider enrolling in automatic payments."  Amy Fontinelle

“Keep paying your credit cards and loans on time, even accounts that aren’t reported to the credit bureaus. These can also wind up on your credit report if you fall behind on your payments.”  Andrew Fiebert

“Technically payments even a few days late can count against you, but generally only payments over 30 days late are reported. Get late accounts back on schedule and maintain on time payments to improve your credit score.”  Matt Hylland

Step #11: Don’t close old accounts

“Leave accounts open so you have some active accounts on your credit report.”  LaToya Irby

“You can cause yourself lots of immediate pain by cancelling old credit accounts. Even if your oldest credit card is not the best, don't close the account! Leave it open so that it will improve your credit history rating.”  Matt Hylland

“As you pay balances off, leave the accounts open. You want to show the lowest balance you can on the credit cards and leave cards active to keep your debt to available credit ratio as low as possible. You can also ask to increase your credit lines, and that can help as well.” Shane Tripcony

Step #12:  Monitor your credit report

Start paying attention! More often than not, poor credit scores are a reflection of letting your finances get too complicated and not keeping your open lines of credit organized.”  Lauren Greutman

“Monitoring credit reports can also help you spot cases of identity fraud, as they will show you recently opened accounts. Disputing and errors or fraud on your credit report will improve your score.”  Matt Hylland

Step #13:  Be consistent

 “Rebuilding credit can take several months of doing the right thing before you start seeing results. Don’t give up before the magic happens.”  Neal Frankle

Patience and tenacity are the keys to success.”  Julia Kernei

How a RISE loan helps rebuild credit

A RISE loan can give you quick cash for an emergency expense, but did you know it can also help you rebuild credit? Our Credit Score Plus program allows you to instantly check your credit score, receive free credit alerts and keep your credit headed in the right direction.*

And with valuable tools that help you learn better money habits, we’re committed to supporting your financial future. Apply online in minutes, and you could receive $500 to $5,000 in your checking account as soon as tomorrow.**

* Customers in good standing may qualify for a reduction in annual percentage rate ("APR"). Installment Loan Customers:  In order to be eligible, you must continue to meet RISE's credit criteria, and we will evaluate the stability of your personal information and identity for each new loan.  If eligibility requirements are met and you make 24 successful, on-time monthly payments (48 bi-weekly payments), the APR for your next loan will be 50% off your original loan's APR (excluding customers with starting rates of less than 75%). Additionally, if you continue to meet eligibility requirements and you make 36 successful, on-time monthly payments (72 bi-weekly payments), you will qualify for a 36% APR for your next loan.  Note that it may take two or more loans to reach 36% APR. (In Mississippi, if you make 24 monthly payments (48 bi-weekly payments), the monthly handling for your next loan will be 50% off (excluding customers with starting rates of less than 75%). And, if you make 36 monthly payments (72 bi-weekly payments), you qualify for a monthly handling charge of 3% for your next loan with RISE. Note that it may take two or more loans to reach a 3% monthly handling charge.)   Line of Credit Customers: In order to be eligible, you must continue to meet RISE's credit criteria, and we will evaluate the stability of your personal information and identity.  If eligibility requirements are met and you make 24 successful, on-time monthly payments (48 bi-weekly payments), the APR on your line of credit will be reduced to 50% off your original APR. Additionally, if you continue to meet eligibility requirements and you make 36 successful, on-time monthly payments (72 bi-weekly payments), you will qualify for a 36% APR on your line of credit.

** Applications processed and approved before 6pm ET are typically funded the next business day. RISE is offered only to residents in states where permitted by law. To obtain credit, you must apply online and have a valid source of income and email address. Approval for credit and the amount for which you may be approved are subject to minimum income requirements and vary by state.

In some cases, we may not be able to verify your application information and may ask you to provide certain documents. Refer to Rates & Terms for additional details. Complete disclosures of APR, fees and payment terms are provided within your Agreement.

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