Skip to main content
Online Banking
Open Online Banking

Finance 101

Steps for Rebuilding Credit

Posted on November 12, 2015 by Kristel Stopoulos

Surprisingly, you don’t rebuild a credit score. You rebuild your credit history, which then is reflected by your credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit report, such as a delinquency or collection account. These new elements will continue to affect your credit scores for a certain amount of time.

Know Your Starting Point 

Obtain a copy of your credit report from all three credit bureaus so that you have a clear understanding of what is says about you and your current credit scores. By law, you’re entitled to receive one free credit report per year from each of the three credit bureaus (Experian website, TransUnion website, and Equifax website). You can get these reports at Annual Credit Report Website.

We suggest that you request one report from one of the bureaus every 4 months. That way you’ll space out your review of these reports throughout the year. When you get each report, check it carefully to ensure the amount you owe for each account is correct and that late payments aren’t listed incorrectly. Report any errors you find to the credit bureau that provided the report. If there are errors, have the credit bureaus investigate and correct them.

Open Credit

If you don’t have any open credit, it is necessary to have new positive items being reported on your credit report. Try to obtain several new accounts or sources such as a secured credit card or department store cards, or being put on someone else’s account as an authorized user. The lower your starting credit scores, the more your need to have positive items reported. Once new positive sources are created, avoid all unnecessary inquiries. Don’t fill out any additional applications for credit.

Close Unneeded Accounts

To control future spending, we recommend that you close accounts that you no longer need or don’t intend to use. If you’ve paid off a high balance or high interest rate credit card, consider closing the account so you aren’t tempted to charge it back up.

Keep Older Accounts Open

Keep one or more of the accounts you have had for the longest period of time. Even if there were late payments on it in the past, pay it on time now and the length of time it has been open will help your credit.

Controlling your spending is more important than maintaining older accounts. So if you are worried about running up balances on open accounts, close them – that will be better for your peace of mind and your long-term credit than having high balance accounts.

Always Make Your Payments On Time

Paying your bills on time is the most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. Delinquent payments and collections can have a major negative impact on a credit score.

Pay Down Your Credit Card Balances

Keep balances low on credit cards and other revolving credit. Target to have the total amount of outstanding revolving debt at 40%, or less, of the total available credit limits. High outstanding debt can negatively affect a credit score.


Establish Diverse Credit

Once you’ve gotten a handle on responsible spending habits and given your credit score a boost, consider diversifying your credit accounts. Switch from a secured to an unsecured credit card and apply for a school or car loan if you need one. Demonstrating your ability to manage different types of credit can have a positive effect on your score.

Time is your ally in improving your credit scores. There is no quick fix for bad credit scores. Rebuilding your credit takes time and dedication. Most credit reports go back seven years so it can take at least that long to make major improvements to your score. But by requesting your credit reports today and following these steps you can stop letting bad credit hold you back from your goals and dreams.