10 Steps to Rebuild Your Credit Fast

Having less-than-perfect credit can make life tougher in a lot of ways. For example, borrowing money can be more expensive because of higher interest rates, or you can even be denied credit when you need it, such as for an auto or personal loan.

Luckily, no matter where you're starting from, you can make progress. We've spoken with a panel of experts to help sort out the best ways to rebuild credit:

1. Always Pay on Time

"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."  Amy Fontinelle

Avoiding late payments is the single best way to rebuild credit. According to FICO, payment history makes up 35% of your credit score — more than anything else. What's worse, missed payments stay on your credit report for a full seven years, although their negative impact lessens with time.

We recommend always signing up for autopay, so you never have to worry about missing a due date. If a company doesn't offer autopay, see whether you can set up automatic bill payments right from your bank account for each of your monthly payments. 

2. Bring Past-Due Accounts Current

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

Overdue bills are more than just an annoyance. They also have an outsized role in dragging your credit score down. That's why it's important to pay these bills off first when you're thinking about how to rebuild credit fast.

Once you pay overdue bills off and bring your account current, your creditors will report them as such to the credit bureaus. That late payment will stay on your credit report for another seven years, but you can take heart that it's not hurting your credit score as much as it was while they were still being recorded as "delinquent."

It's important to know that at some point, whoever you owe money to might transfer your debt to a debt collector. You'd then be on the hook to repay that debt collector and not necessarily your original lender. That's why it's best to reach out to your original lender to find out who you should send payment to. 

3. 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

Sometimes the credit bureaus make mistakes, so not uncommon to have errors on your credit report. According to one FTC study, one in five Americans had errors on their credit reports. And for some of those people with errors on their credit reports, it could have penalized them unfairly when it came time to apply for a loan or line of credit.

There are a lot of paid credit monitoring services out there, but don't be fooled. You have the right to get your credit report once per year — for free — from AnnualCreditReport.com. Due to the pandemic, consumers have access to free weekly reports until April 20, 2022.

4. Dispute Any Errors on Your Credit Report

“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

As we just discussed. it's always good to look at your credit report just to see what's on it and understand how it works, but it's also important to look closely for any errors. If you find any — and there's a decent chance you might — you'll need to dispute the errors with each of the credit bureaus that lists that mistake.

The good news is that you don’t need to pay someone to dispute an error on your credit report, because all the three major credit bureaus provide a free, online option for disputing any errors found on your credit report.

5. Pay Off Your Credit Card Weekly

“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

One lesser-known trick to keeping your credit card debt under control is to actually pay it off every week. This has a couple of advantages.

First, this allows you to keep tabs on what you owe, so you can keep the balance from getting too high. Aside from always paying your bills on time, this is one of the best credit habits to get into.

Second, when your credit card company reports your balance to the credit bureaus every month, it means that you'll probably have a smaller balance at any given time. That helps lower your credit utilization ratio, even though you're spending the same amount.

6. Become an Authorized User

“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. I've seen a client's credit score increase by as much as 30 points by becoming an authorized user.”  Randall Yates

This strategy isn't available for everyone, but if you do have a trusted friend or family member in your life with good credit, this can be a huge help.

It's important to note that your friend or family member doesn't have to physically give you a credit card in order for you to get the benefit. As an authorized user, you'll get the advantage of a good credit history by simply being listed on the account.

7. Get a Secured Credit Card or Store Credit Card

“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

“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

Getting a credit card when you're ready can be a great way to build credit, but often it's hard to get approved, especially if you have no credit built up. Store cards are often easier to get, as are secured cards that require you to make a refundable deposit that serves as your credit limit.

You don't need to start by worrying about things like cash back rewards. Keep in mind that some cards are simply a stepping stone. Look for affordable options that let you demonstrate good credit use so that you can move on to better cards later if you wish.

8. Get a Credit-Builder Loan

"If you want to improve your credit score, credit builder loans are worth considering. They are relatively safe and easy to obtain, especially if you’ve never had credit before." John Schmoll

If you're not yet ready for credit cards, getting a credit-builder loan is another great way to rebuild credit fast. Credit-builder loans allow you to take out a small loan and repay it back over time with automatic repayments. They are more common at credit unions and small banks.

9. Get a Co-Signer

"Banks and credit card companies will extend credit to most people that have a co-signer with excellent credit. The co-signer becomes liable for any debt you accrue, so make sure you communicate your plans for the credit or loan." Andrew Fiebert

If you need a larger loan, getting a co-signer can be another way to rebuild credit, especially on unsecured loans and lines of credit. Just like with becoming an authorized user, you'll want to find someone who trusts you and who has better credit. Not everyone will have someone like this in their life, but if you do, it's a great help.

It's especially important to be careful with asking someone to be your co-signer. If you miss a payment, your co-signer will have to pay, and it'll hurt their credit. No amount of money is worth a broken relationship, so only do this if you know you can always pay your balance on time.

10 . Set Up a Pay-Off Loop

“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

This is one of the best-hidden strategies to improve your credit-building. If you follow this strategy, it's very likely that you'll see your credit score go up with no extra work on your part.

Remember to check on your auto payments every so often and keep an eye out for monthly notifications. This can help you avoid accidentally paying more than you should be or getting charged for services you don’t use.

 

Panel of Financial Experts:

Neal Frankle, Wealth Pilgrim

LaToya Irby, Personal Finance Writer

Randall Yates, The Lenders Network

Shane Tripcony, Best Prepaid Debit Cards

Matt Hylland, Arnold and Mote Wealth Management

Amy Fontinelle, Personal Finance Expert

Tiffany Aliche, The Budgetnista

Johns Schmoll, Frugal Rules

Andrew Feibert, Listen Money Matters

 

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? RISE reports payments to two major credit bureaus, so keeping your account current could help improve your credit score depending on your current financial situation.

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. *

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This content provided is for educational and informational purposes only and does not constitute financial or legal advice. RISE is not acting as a credit counseling or repair service, debt consolidation service, or credit services organization in providing this content. RISE makes no representation about the reliability or suitability of the information provided – any action you take based on this content is at your own risk.