How to Fix Your Credit

Woman running on an empty road on a summer day, symbolizing the journey of rebuilding credit and regaining financial health.

Fixing your credit may feel overwhelming, but taking control of your financial health can lead to lasting benefits. Here are ten key steps to help rejuvenate your credit:

Step 1: Review Your Credit Report

Begin by obtaining your free credit reports from Experian, TransUnion, and Equifax via AnnualCreditReport.com. Regularly reviewing your reports helps you stay aware of any discrepancies or errors that could harm your credit score.

Step 2: Dispute Inaccuracies

If you find errors in your report, dispute them immediately. Each bureau—Experian, TransUnion, and Equifax—has a process for submitting disputes online, by mail, or by phone. Correcting inaccurate information can help prevent your score from being unfairly penalized.

Step 3: Bring Delinquent Accounts Current

Past-due accounts can severely hurt your credit. Bring any overdue payments current as soon as possible, especially before they hit the 30-day late mark. The quicker you resolve late payments, the better it will be for your credit health.

Step 4: Keep Credit Utilization Low

Credit utilization refers to how much of your available credit you’re using. To calculate it, divide your current balances by your total credit limit. Aim to keep this below 30%, and ideally under 10%, to boost your credit score.

Step 5: Prioritize Debt Payoff

Create a strategy for paying off your debt efficiently. Techniques like the debt snowball (starting with smaller debts) or debt avalanche (targeting high-interest debts first) can help. You might also consider consolidating debt into one loan to lower interest rates and streamline payments.

Step 6: Apply for New Credit Carefully

Applying for new credit can lower your score temporarily, so only do so when necessary. Use tools like CardMatch to find credit cards suited to your current profile, increasing your chances of approval without multiple applications.

Step 7: Keep Old Credit Accounts Open

Closing old accounts, even if paid off, can negatively impact your credit score by shortening your credit history and increasing your credit utilization rate. Keep accounts open to maintain a positive credit history.

Step 7: Keep Old Credit Accounts Open

Closing old accounts, even if paid off, can negatively impact your credit score by shortening your credit history and increasing your credit utilization rate. Keep accounts open to maintain a positive credit history.

Step 8: Use Secured Credit Cards

A secured credit card can help you rebuild your credit, even with a low score. By putting down a deposit as collateral, you can access credit and, with responsible use, gradually improve your credit score.

Step 9: Consider Credit-Builder Loans

Credit-builder loans are designed to help improve your credit profile. You make fixed payments, and as your payment history is reported to the major bureaus, it positively impacts your credit score.

Step 10: Monitor Your Progress

Rebuilding credit takes time. Sign up for free credit monitoring services to receive alerts about changes to your credit profile. Stay patient, consistent, and proactive in maintaining good credit habits.

Rebuilding your credit can lead to financial freedom. By following these steps, you’ll be well on your way to boosting your credit score. If you’re in the market for a car but worried about your credit, CreditYES can help you secure financing, no matter your credit history.