5 Ways to Rebuild Your Credit Score

5 Ways to Rebuild Your Credit Score
Steven Tumulski
By: Steven Tumulski
Posted: June 27, 2013
Experts share their tips and advice daily on BadCredit.org, helping subprime consumers navigate the world of personal finance.

If you’ve found yourself in the unfortunate position of having a low credit score, you’re likely desperate to clean things up.

Thankfully, you’re not the first person to be in this position, and there are a few proven strategies you can employ to start making improvements today.

Put the tips in this guide to use, and someday you could find yourself joining the ranks of the elite with an 800+ score.

1. Start Paying Your Bills on Time

One of the largest factors that determine your credit worthiness is how timely you are when it comes to making your payments.

You’ve probably struggled with paying on time in the past, leading to the score you have today. However, you don’t have to pay anything more than the minimum to keep your score from declining any further.

As time goes on and your payment history stabilizes, you’ll notice an improvement. The longer you stick with making your payments on time, the higher your score will go.

2. Use the Snowball Method to Eliminate Credit Card Debts

Another factor used to determine your credit worthiness is your debt-to-credit ratio.

If you have a card with a $5,000 limit and have used it all up, then your credit score will drop.

However, if you manage to pay that balance down to zero, you will experience an improved score. If you have several cards with high limits and low balances, your score will be even better.

“The longer you stick with making your

payments, the higher your score will go.”

For this reason, it’s recommended you don’t close unused credit cards.

3. Open a Secured Credit Card

If your credit is horrible and you aren’t able to get approved for any loan, then you might feel trapped. The easiest way out of this pit is with a secured credit card.

Secured Cards for People with Bad Credit


Your credit limit is usually determined by a combination of your credit score and your opening security deposit. They’ll typically have higher interest rates than unsecured cards and you may even be required to pay an annual fee.

After a full year of paying on time, your deposit will be returned and your score will have improved enough to allow you to graduate to unsecured cards.

4. Take Advantage of a Secured Loan

Secured loans are one of the best strategies for improving your credit worthiness and many financial institutions offer them.

You provide a security deposit that’s generally equal to the total amount of your loan and then make payments for one to two years. When the loan is paid off, your entire deposit is returned.

The best way to use this strategy is by stashing the loan in an interest bearing account, such as a high-yield savings account.

It will still cost you a small sum in interest payments, but the interest gained from your savings account will help offset the cost.

5. Take Out an Auto Loan

Auto loans can be absolutely brutal for those with bad credit. You’ll need to come up with a lot of money down and you’ll have a high monthly payment.

But make your payments on time for the entire duration of the loan and you’ll come out in a much better situation.

You’ll also become eligible for future auto loans with the same lending institution at a lower interest rate.

Toyota, for example, offers an “Encore Program” that helps secure lower interest rates for loyal Toyota customers.

6. Understand It Takes Time to Rebuild Your Credit

None of these tips will cause your credit score to soar overnight. You’ll need to make all your payments on time for at least a few months before you see any improvement and the most notable results can take years.

If you stick with it, you’ll be sure to end up with a much better credit score.

Photo source: key2creditrepair.wordpress.com.