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How to Rebuild Your Credit Score

Here’s what you need to know to rebuild your credit.

Whether you have good credit or bad credit comes down to your credit score. When checking your score, you'll often see it referred to as a FICO® score. FICO stands for Fair Isaac Corporation, the organization that developed the scoring used today. A FICO score is the most popular type of credit scoring model that's used by most lenders. FICO scores help streamline application processes and provide a standardized way to evaluate how likely a person is to repay a loan, based on his or her payment history, use of available credit, and other factors.

While your credit score is not part of your credit report, it’s calculated from the information found within your report. It’s also important to understand that your credit behavior is continually being reported to the three major credit bureaus, so it does fluctuate. There are also various FICO scoring models, so at any given time you have multiple credit scores.

Ranges for FICO 8 (for general lending) and FICO Mortgage Scoring Models

800 to 850 Exceptional
799 to 740 Very Good
739 to 670* Good
669 to 580 Fair
579 to 300 Very Poor

*As of June 2020, the average FICO score for Americans was 701.

How credit report information is used to build FICO scores:

Payment History 35%
Amounts Owed 30%
Length of Credit History 15%
Type of Credit Used 10%
Amount of New Credit Opened 10%

We have more information on your credit score breakdown in this post. Check it out for more details!
Now that you better understand your credit score, how do you rebuild it?

First, request a free copy of your credit report

You’re entitled to a free credit report every 12 months from each of the three major credit bureaus: Equifax®, Experian®, and TransUnion®. This enables you to check your report three times throughout the year without hurting your credit. Be sure to request your report through the only federally authorized site,, as directed by the Consumer Financial Protection Bureau.

Your report will show installment accounts (accounts paid off in installments, such as: car loans, student loans, and mortgages). It’ll also list revolving accounts (accounts with recurring charges and payments, such as: credit cards or lines of credits).

Fix errors on your credit report

The Fair Credit Reporting Act (FCRA) obligates credit bureaus to respond to error inquiries within 30 days. Proven errors are to be removed immediately. You can submit a dispute form on any one of the three major credit bureau sites. Take care of your report; your score will take care of itself.

Make all payments on time — all the time

Easier said than done, yes, but don’t be fooled; the rabbit in Alice in Wonderland was frantically hurrying to make his mortgage payment on time. Late payments remain on your account for seven years. Fortunately, as time passes, their impact wanes. A late payment made five years ago, for example, will have less impact on your score than a late payment made last month. Remember, 35% of your credit score depends on payment history.
  • If you’re able to pay on time, but made late payments because you had 700 other items on your to-do list, set up automatic payments.
  • Contact the companies you owe. Many have established programs to lower your payments or delay their due dates, especially now while the pandemic has disrupted the finances of so many people. 
  • Consider a debt consolidation loan. These enable consumers to combine the balances of credit cards and/or installment loans into one monthly loan payment.

Start building some good credit

Too many credit applications will hurt you, so ask questions up front, but be very selective about applying. The amount of new credit obtained counts as 10% towards your FICO score. Lenders like to see a proven track record and a reliable payment history.

A secured credit card is a good option for building credit. It requires you to deposit money up front that will act as collateral. Borrowing from your own money and repaying it on time month after month shows responsible credit usage that financial institutions like to see.

Watch your credit utilization ratio

Lenders like knowing that you have the self-discipline to not spend every dollar available. Avoid ringing up balances that are more than 30% of your total available credit. For example, if you have $10,000 available credit, you should keep your balance under $3,000. Keeping utilization below 10% is considered excellent.

What can I do in 30 days?

Pay down credit card balances and file any credit disputes. Balances are reported monthly to the bureaus, so improvements will show in 30 days.

Keeping a balance on your card does not help your score. The best way to help your score is to pay your cards in full each month. Use our debt payoff calculator for motivation. Putting just a small additional amount toward your loan each month can really help. 

Begin building good credit habits now and have patience

A proven track record, like an old friendship, can really speak well of you, but it takes years to nurture. Length of credit history counts as 15% of your FICO score. If you have filed bankruptcy, it can take anywhere from 7 to 10 years before this is removed from your record.

You don’t have to go it alone

If you’re feeling overwhelmed, we encourage you to reach out. We partner with GreenPath Financial Wellness to offer free financial counseling services, including credit counseling. 
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