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A Simple Plan That Could Help Rebuild Your Credit

A Simple Plan That Could Help Rebuild Your Credit

By Nicole DeMarco • September 05, 2019

When your credit is poor — even if you haven’t had to file for bankruptcy — rebuilding it can often seem like an uphill battle. While rebuilding takes commitment, time and the proper know-how, improving your credit score and credit rating can be done. To make things less daunting, we’ve outlined a simple plan with basic ways to rebuild credit after it’s taken a few hits.

1. Establish a new (and realistic!) budget

The first step in rebuilding credit is to take responsibility for a budget. Be completely transparent about the recurring expenses you have compared to your income. When budgeting, it’s critical to factor in paying down debt to keep balances low and to avoid increasing your balance. To bounce back from a low credit score, you’ll have to prioritize rent or mortgage payments, utility bills, loan payments, credit card bills and savings over non-essentials.

2. Get a secured credit card

Though it might sound counterintuitive to use a credit card on the path to rebuilding your credit, using a secure credit card judiciously — like to make utility payments — can actually help to improve your credit score. The difference between a secured credit card and a typical unsecured one is that a secured card requires you to deposit money into a special bank account, and your credit limit on the secured card equals the amount you deposited. This will prevent you from running a credit balance larger than what you have planned to spend.

3. Track, track and track some more

When working to rebuild your credit, it’s imperative that you keep an eye on your finances. This means paying attention to due dates (consider enrolling in autopay options), your credit report and keeping balances low. A missed payment can remain on your credit report for up to seven years(!)1, so making even minimum payments is extremely important. Keep a close eye on how your budget is trending as well. Any unexpected financial hiccups will need to be accounted for. You should know exactly where your money is going and how much is there.

4. Save for the future — the planned and the unexpected

It’s not unusual for a large unanticipated expense (like medical bills or loss of income) to cause your credit to spiral. Allocating a portion, however small, of your budget toward an emergency fund can prevent you from running into the same issue twice. A nest egg of savings can also help avoid having to put a large sum on a credit card, which may stretch you extremely thin and negatively affect your credit score.

Hold on tight to good habits

Once you’ve made strides toward rebuilding your credit, it’s important to maintain the good habits that have helped you dig yourself out. It’s easy to think, “Well, I’ve paid off my credit card balance, I’m good,” and backslide. Sticking to your good habits will keep you above water as you continue to improve your credit rating.


The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal or any other advice specific to you the user or anyone else. The companies and individuals (other than OneMain Financial’s sponsored partners) referred to in this message are not sponsors of, do not endorse, and are not otherwise affiliated with OneMain Financial.