Effective Ways to Rebuild Your Credit

Having a good credit score can lead you to many excellent financial opportunities. However, it doesn’t take that much to hurt your credit score. For example, frequent misses or late payments can lower down your credit score before you know it.

If you have made some financial mistakes in the past, your credit score might be lower than you expected. These can’t be easily deleted from your credit history.

What you can do is to work on ways to rebuild your credit.

Factors that Can Influence Your Credit Scores

Many factors can have an impact on your credit score. Most of the time, they are the following:

  • Payment History: This includes the on-time, late, and missed payments you have made over the years. It is one of the most critical factors in your credit score. One late payment can negatively affect your credit score.
  • Credit Utilization Ratio: This is the amount of credit you are using divided by the total available credit you currently have. This ratio presents how much of your total credit you are utilizing. Moreover, it can also show how reliant you are when it comes to non-cash funds.
  • Credit History Length: This will show how long you have been handling credit accounts. This includes the age of your oldest to your newest credit accounts. It also includes the average age of your credit accounts combined. Moreover, in general, the longer the credit history, the higher your credit score is most likely to be.
  • Total Debt: This is the amount of debt you currently have, including credit cards, collections, loans, and others.
  • Credit Mix: Most of the time, those who have good credit scores have diverse credit accounts. You could choose to mix CreditNinja personal loans with other types of credit, such as credit cards, a mortgage, or even a car loan. Having a mix of credit will help indicate how well you manage different types of debt.
  • New Credit: This shows your current applications for new credit. It also shows the hard inquiries lenders most likely make when you apply for credit. Having too many accounts and inquiries can hurt your credit score.
  • Public Records: This includes civil judgments or bankruptcies.

Tips on Rebuilding Your Credit

If you currently have low credit status, it is best to work on ways to improve it. Below are some tips you can use:

Choose to Pay On Time

You should pay all of your bills and lines of credit on time if you can. As mentioned earlier, your payment history greatly affects your credit score. If you are having trouble with on-time payments, do your best to pay the minimum. You can also work on making some arrangements with your creditor, even just for a little while.

In rebuilding your credit, you can’t afford to have late or missed payments. Late payments typically stay on your credit report for around seven years. This means it would be challenging to recover.

If some of your bills have gone to collections, prioritize open accounts. Collectors may chase you with those bills, but you should not make them your top priority.

Do Your Best To Keep Most of Your Credit Available

Experts recommend not going higher than 30% on your credit limit. This means going lower will positively impact your credit score. In case you have a high credit utilization ratio in the past, it will be okay as long as you currently made a way to bring the balances down.

Consider Getting a Secured Credit Card

This is excellent for people who would want to build their credit from scratch. If you have credit card accounts that have been closed, getting a secured credit card is an excellent way to start. This type of card will need an upfront deposit.

The deposit you are required to give will be your credit limit. It would be best to choose a secured credit card from an issuer who reports to the three major credit bureaus. Furthermore, this type of card acts like any other credit card.

Consider a Credit-Builder Loan or a Secured Loan

A credit-builder loan is designed to help improve your credit score. Banks and credit unions typically offer this type of loan. However, you might be required to become a member or a customer. You also might need to show income or any proof of your ability to repay the loan. Lenders will get hold of your money and only release it once you have fully repaid the loan.

If you have funds on deposit, you might be able to borrow using a share-backed or certificate-backed loan. This is a type of secured loan that uses your bank savings as collateral. The bank or credit union will take good care of your money until you fully repay the loan.

Consider Being an Authorized User

You can become an authorized user of another person’s credit card. This can positively impact your credit by just being on the account. However, it is essential to know that the positive impact might be modest since you won’t be responsible for the account.


Rebuilding your credit score might take time. However, it pays to boost your credit as much as you can. Always remember, a good credit score makes your financial situation way better. Hence, do not be complacent in fixing it.