By Jennifer Tucker
August 28, 2024 | 7 Min. Read
If you have damaged credit, you’re not alone. Many people face challenges with their credit scores due to inexperience or financial setbacks. While negative marks on your credit report can linger for many years, it’s important to know that you’re not condemned to a life with low credit. With positive behavior changes, time, and commitment, you can rebuild your credit and improve your financial future.
Big changes in your credit score may take time—typically around 24 months of consistent, positive financial habits. During this period, focus on making all your bill and loan payments on time, managing your credit mix, minimizing new credit inquiries, and keeping your balances low. Each of these factors plays a role in your credit score, and effectively managing them will set you on the path to achieving your financial goals.
Here’s a statistic you might not know: over 70% of your credit score is based on your past two years of credit behavior. Now is the time to begin the journey of establishing good financial habits to rebuild your credit score.
Improving your credit score can open the door to new opportunities and help you achieve your financial goals. If your credit score has been damaged in the past, consider these 6 strategies to boost your score and get back on track.
Millions of people are working to get back on track and restore their credit. If you need help, you’re not alone.
When you’re looking for reliable information on improving your credit, you might feel like you’re bombarded with information. Who can you trust? There are many reputable, free resources out there.
Remember, you shouldn’t have to pay to rebuild your credit or get information on how to manage debt. Beware of companies that claim they can repair your credit fast. These are often scams. Instead, seek out a financial counselor who can help you understand your financial goals and the steps to get there.
There’s no fast fix for building or repairing your credit—it takes knowledge, behavior changes, time, and commitment. But small, consistent changes can make a big impact.
Don’t let damaged credit get in the way of where you want to go. Get Credit is a simple way to build or rebuild your credit and build up a stack of cash along the way. It’s a 12-month loan that helps you improve your credit history and increase your savings by making on-time payments.
How long it takes to repair your credit depends on the severity of the issues and the actions you take to address them. Minor errors can be corrected within a few months, while more significant issues, like missed payments or collections, may take several months to a few years to resolve.
Yes, it is possible to repair your credit on your own! Strategies like disputing errors on your credit report, paying down debt, and creating a budget can put you on the right track to an improved credit score. However, if your credit situation is complex or overwhelming, you might benefit from the help of a financial counselor or credit counseling agency like GreenPath.
Paying off collections can improve your credit score, especially if the collection account is marked as “paid” or “settled.” However, the impact may not be immediate, and the account will still appear on your credit report for up to seven years. Over time, a paid collection is better for your credit score than an unpaid one.
If you have a strong history of on-time payments, you may be able to remove a late payment from your credit report. Contact the creditor to request a goodwill adjustment. If the late payment is an error, file a dispute with the creditor and the credit bureaus.
Debt settlement can help you reduce or eliminate outstanding credit obligations, but it can also negatively impact your credit score. Depending on the time of debt, the amount, and other factors, settling a debt can lower your credit score by as much as 100 points. Debt settlement will also be noted on your credit report, and it can stay there for up to seven years.
Learn more about debt settlement and debt consolidation.
Opening new credit accounts can help repair your credit—but only if you manage them responsibly. If you use the account infrequently and pay down balances immediately, a new credit account can help you improve your credit utilization ratio and diversify your credit mix. However, avoid opening too many accounts at once, as multiple hard inquiries on your credit report can temporarily lower your score.
Closing old credit accounts can negatively impact your credit score by reducing the average age of your credit history and increasing your credit utilization ratio. It’s generally better to keep old accounts open and use them occasionally to maintain a longer credit history and a lower utilization rate.
To improve your credit utilization ratio, aim to keep your credit card balances below 30% of your available credit limit. You can achieve this by paying down existing balances, requesting credit limit increases (without increasing your spending), and using multiple cards responsibly.
/blog/how-to-check-your-credit-reportTypically, it’s a good idea to check your credit report at least once a year. While working to improve your credit, you may want to check your score more frequently (monthly or quarterly). Regularly monitoring your credit score allows you to quickly identify errors or suspicious activity and ensure your efforts to improve your credit are reflected accurately.
Learn more about how to monitor your credit.
If you suspect identity theft, act quickly by contacting the three major credit bureaus to place a fraud alert on your credit reports. Frequently review your credit reports for unauthorized accounts or transactions, dispute any incorrect or fraudulent entries, and report the identity theft to the Federal Trade Commission (FTC) and local law enforcement.
Learn more about how to report identity theft.
Marine Credit Union’s Get Credit
How to Report Your Rent to Credit Bureaus
Paying Down Debt to Improve Credit
Wisconsin Department of Public Instruction: Personal Financial Literacy
My FICO: FICO Scores vs. Credit Scores
