Ways to Rebuild Credit

Bad credit can happen to good people. Don't despair if it has happened to you. There are ways you can get your credit back in shape. But you have to start working on it today -- and keep working hard to show potential lenders that you're serious about getting your credit in order. As you do so, your credit should improve and that could result in better credit offers and a savings in money.

Here are ways to rebuild your credit:

Open new accounts and pay them off.
Being able to repay a variety of new accounts is a key step in rebuilding your credit. That means that devising a strategy to open and pay off as many different kinds of accounts as you can is better than adding more debt to an existing credit card.
Start small.
Rebuilding your credit can be similar to starting over from scratch, and starting small may be the easiest option. Credit cards from department stores or your local credit union can be useful.
Consider asking for help.
If you can't qualify on your own, ask a friend or family member to cosign for a small loan or credit card. If you can stay current on a major credit card account or small auto loan, this will speed up the process of re-establishing good credit on your own.
Consider a secured credit card.
They are guaranteed by a deposit that you make with the credit grantor. Secured cards offer the purchasing power of a major credit card. Just make sure the grantor reports payment histories to the three major credit history reporting agencies so you're building your positive payment history.
Use your new accounts in moderation.
And make payments that are more than the minimum. You can keep a small balance so that your positive payment history will continue to show up on your credit history report.
Keep your balances low.
Avoid carrying a balance that is more than 30% of your credit limit (lenders may view it as excessive debt that you may not be able to stay current with).
Reduce your household spending.
Review your household expenses and determine which ones you could do without. Consider creating a budget to track exactly where your money goes each month.
Call lenders if you can't pay some of your debts.
Explain your situation and many of the lenders will be willing to work out a plan for you to pay back what you owe.
Contact a credible credit counseling agency to make a plan for paying off credit bills.
Beware of agencies that offer "quick fix" ways to get out of debt.
Check Your Progress
By reading this, you have taken the first step toward rebuilding your credit. Now it's time to take the next. Do you know exactly where your credit stands? Find out by purchasing your Equifax Credit History Report.

Be Patient as you rebuild your credit—the Payoff Is Worth It
It takes some time for your new credit history to gain momentum. You are demonstrating that you are not depending on certain credit cards and loans for your financial survival. That's why opening and paying down accounts may make it a little easier to get more credit. With patience and timely repayments, you'll likely be able to build a new credit history that lenders will look upon favorably when making decisions about your ability to handle even more credit.