How to Rebuild Your Credit

How to Rebuild Your Credit

If you have poor credit, ignoring the problem is one of the worst things you can do.

Here’s why credit really matters and what you can do to earn top credit scores no matter your history.

How credit impacts your life

When you’re applying for loans or credit cards, credit checks are routine, and your score determines more than just whether you’re approved or denied. The better your credit, the lower the interest rates and fees you’ll pay — and the more cash you’ll have in your wallet.

But credit’s influence goes much further. Prospective landlords might also check your credit, so having low scores could mean being passed over for your dream apartment. Scores can also affect your mobile phone plan access and insurance premiums.

Easy ways to improve credit

Even if you’ve had bad credit for years, these tips can help you rebuild your score:

Pay all bills on time

Many businesses you deal with report your payment activities to the credit bureaus — and this strongly impacts your scores. Consider signing up for automatic electronic payments or bill payment reminder texts to ensure you don’t damage your credit by forgetting to mail a check.

Don’t max out cards

You might have a high credit limit, but that doesn’t mean you should use it all. The credit bureaus award high marks to those with optimal credit utilization ratios — typically those who use no more than 30% of their available credit at one time.

Carry a mix of debt

Having more than one type of debt can favorably impact your scores. Financial institutions like Baylor Health Care System Credit Union offer a wide range of competitive financing options, including credit cards, mortgages, auto loans, and personal loans to help you establish an affordable, healthy mix.

Keep an eye on your credit

Even if you’re doing everything right, identity theft or clerical errors can still ruin your scores. To catch and correct problems early, monitor your credit reports regularly. Order your free annual reports at or by calling 1-877-FACTACT.

Keep in mind that credit bureaus consider people without credit histories as risky as those with bad ones. If you’re starting from square one, apply for easy-to-get credit such as a store credit card, gas card, secured card or secured loan.

It takes time and patience to achieve stellar credit, but adopting smart financial habits can improve your score. Eventually bad credit will be a thing of the past, and you can gain all the advantages top score earners enjoy.

Roberta Pescow, NerdWallet