How to rebuild a credit score is info anyone with less-than-perfect credit history ought to know. Fortunately, there are many ways to rebuild credit scores quickly and effectively — even if you’ve had difficulties in the past.

In this post, we offer some of the fastest ways to rebuild credit. So, get ready to improve your credit record starting now!

Credit Score Factors

Your credit score is a numerical representation of how creditworthy you are likely to be to prospective lenders. It's a predictive value based on past performance and behavior. Most data used to calculate your credit score comes from credit bureaus (like Equifax, Experian, and TransUnion).

Rebuilding a credit score is a complex process because a lot of variables impact a person's credit score. Among these factors are:

• Payment history has the greatest impact on one's score and involves timely payments of accounts.
• Credit utilization ratio, the second most important factor, is calculated by dividing the total amount of debt by the total amount of available credit.
• Amount of debt owed can indicate one’s ability to meet monthly credit obligations on time.
• Length of credit history involves the amount of time an individual has had accounts open.
• Types of credit used refers to the mix of accounts or debt an individual has, such as a mortgage or student loan.

It's important to understand all these factors when working to repair your credit.

Life Happens, Credit Suffers

Let's get real for a minute. Chances are — more people than you realize have dealt with credit-related difficulties at one point or another.

We're all human, which means things come up and our credit record gets some damaging knocks. People make mistakes, take on too much debt, miss payments, etc.

If we were robots running on fail-proof algorithms, maybe we could avoid some of life's inevitable challenges. But we aren't and we can't.

What matters, though, is how we respond. Even if you can't fix your credit situation immediately or in grand and sweeping ways, you can do something. Every little bit helps! And you have the ability to make positive changes and progress when it comes to rebuilding your credit score.

It Takes Time to Rebuild Credit

Unfortunately, fixing your credit doesn’t happen as rapidly as breaking it can.

Rebuilding your credit score can take anywhere from a few months to several years depending on the severity of the damage. For example, here's how long some common credit-score-hurting events can stay on your credit record:

• Hard inquiries (like for credit card and loan applications). 2 years
• Late and missed payments. Up to 7 years
• Judgments and collections. Up to 7 years
• Bankruptcy. Up to 10 years

Taking the actions outlined in the section below can help you improve your score as quickly as possible.

15 Fastest Ways to Rebuild Your Credit Score

OK, riding the high tide of that mini pep talk, let's look at some actionable steps you can start taking to rebuild credit.

Fastest Ways to Rebuild Your Credit Score

1. Pay your bills on time (or early). If nothing else, do this! Late and missed payments drag down your rating in a flash, no matter how good your other credit indicators are. You can even make multiple (e.g., biweekly) payments to make an even greater impact.
2. Catch up on past-due bills. Accumulating late payments over time can really take a toll. Try to catch up on any overdue bills as soon as possible.
3. Reduce your credit card balances. Ideally, don't carry forward any balances on your credit cards. Paying them off each month is a game-changer!
4. Don't use all available credit. Just because the limit is X doesn't mean you have to spend to the max. 
5. Don't close open accounts that are unused. They can help your credit utilization ratio.
6. Save for a rainy day. With an emergency fund on the ready, you won't have to lean on credit so much to get you through lean times or unexpected expenses.
7. Limit new credit applications. You'll want to avoid having too much debt as well as too many hard credit inquiries (especially within a short period of time). 
8. Skip prepaid credit cards. They won't help rebuild your credit score.
9. Consider a secured credit card. This kind of card is often easier to get than a traditional unsecured card — because you pony up a cash deposit as collateral for future purchases made with the card. Just make sure you get a card from a company that reports in to the credit bureaus and that you use the card responsibly (e.g., make on-time payments and stay within your spending limit). 
10. Get a loan purpose-built for debt repair. You can use a credit-builder or secured loan to pay off many separate debts and then only have a single pool of debt to tackle.
11. Find a co-signer. A co-signer (e.g., a family member or friend) is someone who agrees to be responsible for a loan if you can't qualify for it on your own. Essentially, they’re putting their creditworthiness on the line so that you’re more attractive to lenders.
12. Become an authorized user on someone else’s account. You can leverage the good credit standing associated with the other person and their account to rebuild your credit. However, if the account gets into trouble — you both face the consequences.
13. Start diversifying your credit mix. Having and managing different kinds of debt — like a car loan and a credit card — can help establish a track record of responsible borrowing.
14. Beware of fraudsters. Sadly, there's no shortage of unscrupulous players. As you explore these methods of rebuilding your credit, act cautiously to avoid scams (e.g., bogus credit card or loan applications).
15. Monitor your credit reports regularly. Make sure there aren’t any errors, which can be harmful. If you spot any mistakes, get them fixed ASAP.

Boost Your Effort Credit-Rebuilding Efforts

Here are a few tips to make mending your credit a bit easier.

• Set SMART goals. There's lots of information online about creating SMART goals — ones that are specific, measurable, achievable, relevant, and time-bound. This goal-setting approach guides you to define what you want to accomplish in an articulate and usable way.
• Make a realistic and liveable plan. This will help you stay organized. You'll know what's due to whom and when.
• Be sure to track your progress and be consistent. Yes, it takes patience and persistence — but it's so worth it! Staying on top of where you are in the credit rebuilding process will make you a savvier consumer, build terrific habits for the future, and keep you motivated to keep going even though it can be tough.

Bonus Tip: Let Valley Credit Union Help You Rebuild Your Credit

If you’re in the midst of credit score woes, you may feel alone, overwhelmed, panicked, and so on. It’s a stressful time.

But, the good news is that you don’t have to face your challenges all by yourself. VCU’s staff is invested in its members’ financial — and overall — well-being. Our talented and caring crew is here to support you and your efforts to rebuild your credit.

Reach out today to see how we can help you get you back on the road to a healthy credit score.

About the Author

 Katie Clark, Director of Administrative Services

Katie Clark has been at Valley Credit Union since 2011. She serves as the Board Secretary and oversees Human Resources, Marketing and Facilities for the credit union, some even call her the credit union mom. As a CUNA and GoWest HR council member she stays connected with the latest industry happenings. When she’s not in the office she enjoys weekends with family & drinking wine at the Oregon coast.