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Getting started on rebuilding your credit may seem like a long task with little light at the end of the tunnel. But really, a few strategic steps can make a noticeable difference in your credit score.

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Whether you want just a few ideas for rebuilding your credit or the full enchilada, we’ll walk you through your options. Plus, you’ll even find a few bonus tips on what not to do in order to get that number growing.

Let’s get started.

What can you do to rebuild your credit?

There are actually quite a few ways you can jumpstart that credit number. Pick one, pick them all, just remember that the sooner you get started, the sooner you’ll start seeing results.

Address Any Credit Report Errors

First things first, you need to check your credit report to see what’s actually on there. You can get a free copy from the three credit bureaus once every 12 months, just submit a form at AnnualCreditReport.com.

It’s sponsored by Equifax, Experian, and TransUnion and is authorized by federal law; in other words, accessing your free credit report is your legal right!

Once you have your reports, you need to scour each one for accuracy. Don’t just look to see if the actual account is yours — check the amount owed, payment history, and other details to make sure that information is accurate. Pay careful attention to negative items because they’ll be doing the most damage to your credit score.

If anything looks incorrect or outdated, send a dispute letter. If the listing is outdated or erroneous, it should be removed within a few months.

After any change is made to your credit report, the bureau should send you a new copy for free so you can view the updates. Depending on the importance of the negative item removed, you could see an increase in your credit score at this point.

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Keep Your Debt Low or Pay Down Existing Debt

Debt plays a huge role in determining your creditworthiness in the eyes of lenders and other creditors. Having too much can be a red flag, but not having enough can result in lenders not having enough information to go on.

Here’s how balancing your debt can help rebuild your credit.

The key is to not overburden any one specific account. If you’re approaching your credit limit on a credit card, your score will take a hit.

If you’ve already maxed out some of your cards, it’s time to start paying those down. And if you need to make some major purchases on a credit card in the near future, think about spreading it out over different accounts.

Need some comparison benchmarks for how much credit you should utilize?

Typically, you want to keep your balance below 30% of your credit limit. That ratio (in addition to how high of an interest rate you’re paying) can help you determine which debts to pay off first.

If your APR is comparable across cards, work on getting each one below that 30% threshold. For example, if you owe $4,000 on an account with a $5,000 limit, keep paying it off until your balance is under $1,500. Not only does keeping your debt low save you money, it can also help fix your credit.

Make Your Monthly Payments On Time

We can never stress enough how important it is to pay your bills on time each month. And this doesn’t just refer to your credit cards, but all of your bills as well, including loans, utilities, and cell phones. Don’t stress if you’re a few days late.

How long do you have before your late payment is reported to the credit bureaus?

The limit is 30 days. After that, it’s likely your missing payment will be reported and your credit score will drop. But there’s the catch: you’ll receive a new negative entry for every 30-day period afterward that you haven’t paid.

And if you still haven’t worked something out with your creditor after a few months, your account could be sent to collections. That creates an entirely new negative entry on your credit report that can cause a huge drop in your score, not to mention scare away potential new creditors.

Not only does this tip help prevent new bad credit entries, it’ll also help increase your score over time. Stick with it and you’ll start seeing positive results soon.

Avoid Closing Existing Credit Accounts

Account age is another determining factor used in your credit score. While you may think it’s better to close an account, consider a few things before you do.

First, understand how account age actually affects your credit. Any new account could cause a slight dip in your score, so it’s important to keep older accounts open to balance out new financial products.

But there’s a myth in the personal finance sphere that closing a credit card automatically removes that history from your credit report.

That’s not true.

Each close account stays on your report for an additional ten years. It won’t hurt your credit score today, but you could see a decrease further down the road if you haven’t replaced it with another card history.

When is it smart to close a credit card account?

The answer is anytime you’re paying an annual or monthly fee that isn’t offset by other benefits received from the account. If you have a travel rewards card, for example, you may accrue enough points that save you more than you pay for the annual fee.

Take a good look at how you’re using your credit cards and other accounts to figure out if they really deserve a place in your wallet.

Use a Secured Credit Card or Credit Builder Loan

When you have a shaky financial past, it may be difficult to get new credit. But you may need it for either a monetary emergency or simply to have an account that reports your on-time payments and help your credit.

Luckily, there are two products that can help you in these situations — but they do come with some caveats.

The first is a secured credit card. They’re common with banks and credit unions, although you can find some online options as well.

In order to receive a secured credit card, you’re required to make a security deposit that serves as collateral in case you fail to make payments. In exchange, however, the creditor should make regular reports to the credit bureaus so you can begin rebuilding your history.

The second financial product is a credit builder loan. Again, you make a deposit in the loan amount to the financial institution, then make monthly payments (with interest). It may seem unproductive to pay for money you already have, but the bank provides the service of reporting your payment history.

Once you’ve successfully used either of these products for a certain period of time, you can usually upgrade to a better credit card or loan.

How can you rebuild your credit fast?

It’s no secret that it takes time to rebuild your credit. But there are a few ways you can speed up the process.

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Make payments twice a month

Even if you pay your credit card balance in full each month, your credit score could be suffering if you charge a lot.

Why?

Credit bureaus don’t look at your balance in real-time. Instead, they typically receive monthly updates from the credit card companies.

That means even if your balance is $0 after you pay off your statement, your credit report may look different. In fact, you could appear to have a 100% credit utilization rate even though you’re not carrying a balance each month!

You can avoid this problem by making more than one payment each month. That way, you’re reducing your balance for when the credit card company chooses to take a snapshot of your account and send to the bureaus.

If you ever charge a large amount and are able to pay it off right away, you can do that even before your statement comes due.

Increase your credit limit

When you don’t have the means to pay down your debt in a large bulk but are making on-time payments each month, it is still possible to improve your credit score. You can do this by requesting an increase in your credit limit from your credit card provider.

That automatically lowers your credit utilization. Here’s how.

Let’s assume again that you have a $4,000 balance on a $5,000 credit card. That’s a credit utilization ratio of 80%. But if you’ve been a loyal customer with a strong repayment history, you could call customer service and ask for a larger line of credit.

Say you get that up to $8,000 and don’t add any new debt to the account. Your $4,000 balance now only account for a 50% credit utilization. It’s a great start and makes it much more manageable for you to get that number down to 30%.

If you’re close to someone with a strong credit history, consider becoming an authorized user on one of their existing credit card accounts. When you do, you’ll automatically get the age of the account and payment history added to your credit report. It’s basically a shortcut to rebuilding your credit.

The downside, of course, is that any negative history associated with their account will also be included on your credit report. And if you get access to the card and charge a lot or don’t make payments on time, their credit will also be affected.

This can be an extremely effective tool to quickly rebuild your credit, but it definitely requires a close relationship and an upfront conversation about expectations.

Be honest about your intentions and ask the person for total transparency in their own financial habits. After all, if they hit a financial bump, it could affect you as well.

Still, becoming an authorized user is definitely a viable option, especially if you can have an open dialog with someone like a parent, spouse, or lifelong friend.

How long does it take to rebuild your credit history?

Rebuilding your credit history is definitely a process. Some negative items, like late payments, can stay on your report for up to seven years. Bankruptcies can last as long as ten years. But even then, their impact on your credit score begins to wane as time goes by.

Once you start diving into some of the tactics we’ve discussed, you’ll likely start seeing results in your credit score within a few months.

After that, it could still take years to completely rebuild your credit depending on what specifically is on your report. Luckily, the things you need to do to rebuild your credit are also things that are really beneficial to your overall financial health.

It’s worth making some lifestyle changes to pay off your debt, make your payments on time, and regularly stay on top of your credit report.

After all, repairing your credit is just the first step. Once you’ve got that underway, you can begin thinking about financial goals as well, whether it’s buying a house, going back to school, or saving up for a major purchase.

The best thing about having good credit is that it opens the door to more possibilities for your life. When you start acting on ways to rebuild your credit, you’re taking the first step in a journey full of potential.

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