How to Rebuild Your Credit

Advertiser Disclosure Editorial Disclosure

Last updated on April 12th, 2023

It’s not uncommon for cardholders with rising credit card debt to ultimately end up with less than stellar credit. Cardholders who can’t pay a bill on time or don’t make them at all risk these actions staying on their credit report for seven years. This, in turn, seriously affects your credit score. Declaring bankruptcy can stay on their credit report for 10 years. Major downsides of having poor credit include denial of credit and mortgages, denial of job opportunities, and much higher interest rates on loans. All hope is not lost, however as most credit counselors and experts agree on these key steps for reversing negative fortune and getting a positive credit score. Here’s how to rebuild your bad credit and reclaim a good credit score.

Get a Credit Report

The first step cardholders should take when trying to repair their credit is to get a credit report from one or all three of the major credit bureaus: Equifax, Experian, and Transunion. offers anyone a free copy of all three credit reports once every 12 months. Understanding their credit history is crucial to cardholders because they’ll know if they have too many missed payments, if their debt utilization ratio is too high, or if fraudulent accounts have been opened in their name. Understanding these deficiencies is the first step in correcting them and improving the cardholders’ FICO score.

Make Your Payments on Time

If a cardholder wants to improve their credit score nothing is more important than establishing a consistent payment history. Anyone hoping to find the most flexibility as to how much they should pay and when should call their credit card companies to work out a reasonable payment plan. A more consistent payment history looks very good to the credit bureaus, and cardholders should focus on making sure they improve their spending habits to avoid adding more to their existing balances.

Pay Down Credit Cards

It’s important to pay down as many credit cards as quickly as possible because spiraling interest rates will only continue to compound if balances are left unchecked for too long. Your Credit utilization ratio (or the amount of credit you use versus your total credit lines) accounts for nearly a third of your FICO Score – the second largest contributing factor, after payment history.

Two common methods cardholders should consider when paying down credit card debt are the debt avalanche and debt snowball plans, both of which have their pros and cons.

The debt avalanche method calls for making minimum payments on all accounts and loans but then using any leftover funds to pay down the largest debt. Conversely, the debt snowball plan is about making the minimum payments on all accounts and using any leftover cash to pay down the smallest debt amount first. As previously mentioned, both methods impact your credit score and have their pros and cons, and cardholders should develop a plan that is realistic to their financial situation.

Become an Authorized User

There’s a good chance cardholders hoping to repair their credit have family or friends with good credit and multiple credit card accounts who may be willing to add them as an authorized user. Such a kind gesture and willingness need to be heeded because the responsibility for paying for the expenses racked up by the authorized user falls squarely on their primary cardholders’ shoulders.

A massive accumulation of charges or missed payments is legally the primary cardholder’s responsibility, and any mistakes with the credit card could ultimately affect the primary cardholder’s own credit score. If someone with poor credit becomes an authorized user, it is recommended that they live within their means and be fully cognizant that someone else’s credit score is literally in their hands.

One of the benefits of becoming an authorized user is that you can build your credit through the hard work of both you and the primary accountholder. This can help you quickly rebuild your credit and help you qualify for your own credit card in the future, or auto loans, home loans, or other financial products.

Apply for a Secured Credit Card

If you’re hoping to rebuild your credit should consider applying for a secured credit card, which requires applicants to make a deposit equal to what the card’s credit limit will be. Cardholders who use a secured credit card will be on the path to good credit if they use it responsibly and pay off their entire credit card bill on time to avoid paying interest.

Using secured credit cards responsibly has its perks as some credit card issuers offer benefits to cardholders such as rewards points and cash back. Many secured credit cards also don’t charge any annual fees. After a consistent payment history has been established and a cardholder’s credit score has gone up, they may have the option to upgrade to an unsecured credit card with more benefits.

Related Article: What are the best secured cards of 2020?

Apply for a Credit-Builder Loan

Cardholders taking steps to improve their scores should think about applying for a credit-builder loan, which they can get from a local bank or credit union. How credit-builder loans work is an applicant decides they want to take out a $1,000 loan with a 12% APR over 12 months, and each month the borrower must make their monthly payments plus interest.

Once the $1,000 is paid back 12 months later the money is then released to the borrower, and often times a significant chunk of the interest they paid will be refunded back to them. These types of loans benefit borrowers and anyone hoping to rebuild their credit because each on-time payment is reported to the credit bureaus, and once the loan has been paid off it effectively turns into savings.

Build an Emergency Fund

Once cardholders have a solid footing in paying down their debts and have sorted out their financial issues their next task should center around building an emergency fund to avoid being tempted to use credit cards going forward.

Accidents and emergencies happen, and a cardholder who is rebuilding their credit shouldn’t have to risk ending up back at square one because of any unforeseen circumstances. A solid emergency fund will save cardholders from a major vehicle repair or medical bill, and it will ensure they won’t have to risk their credit repair goals.

Related Article: Do Credit Card Perks Also Apply for Authorized Users?

About: Allan
Allan Guzman Chinchilla

Allan is the Managing Editor at In addition to leading a robust team of writers in the pursuit of thorough credit cards expertise, he is an avid fan of films, food, traveling, and Star Wars.

Advertiser Disclosure

BestCards is an independent, Florida-based credit card comparison platform. Many of the card offers that appear on this site are from companies from which BestCards receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). BestCards does not include all card companies or all card offers available in the marketplace.