Rebuilding credit can feel overwhelming, but the good news is that it’s entirely possible with the right approach. Whether you’re bouncing back from missed payments, high debt, or even bankruptcy, you can take concrete steps to improve your credit score and regain financial stability. The key is consistency—small, smart decisions over time will help you rebuild credit and open doors to better financial opportunities.
Let's break down everything you need to know on how to rebuild credit. You've got this!
How rebuilding credit works
Your credit score isn’t set in stone—it’s constantly changing based on your financial behavior. Lenders look at factors like payment history, credit utilization, length of credit history, types of credit, and new credit inquiries.
The goal of rebuilding credit is to show lenders that you’re responsible with money. By making on-time payments, keeping balances low, and using credit wisely, you can gradually improve your credit score and strengthen your financial future.
How long does it take to rebuild credit?
Rebuilding credit isn’t an overnight process—it takes time and consistent effort. The length of time depends on your starting point and the severity of past credit issues. If you have a few missed payments, you may see improvement in as little as six months. More serious issues like bankruptcy can take several years to recover from fully. Generally, you can expect to see gradual progress within 12 to 24 months if you follow responsible credit habits.
For a little extra guidance, read this next: How Long Does It Take to Rebuild Credit? Here’s What You Can Expect
How to rebuild credit, step by step
Rebuilding credit takes time, but every positive step you take moves you closer to a healthier financial standing. Let's get into what you can do to rebuild your credit.
1. Review your credit reports
Before you can fix your credit, you need to know what’s hurting it. Get free copies of your credit reports from Experian, Equifax, and TransUnion at AnnualCreditReport.com. Keep in mind that a credit report is different from a credit score. The report contains detailed information that is used to calculate your credit score. Look for errors, outdated information, or signs of fraud that could be dragging your score down. If you find any inaccuracies, dispute them with the credit bureau to get them corrected.
Read this next: Credit Report 101: A Visual Guide to Building Your Score
2. Make on-time payments a priority
Your payment history is the biggest factor in your credit score, making up 35% of your credit score. “The most damaging habit is late or missed payments, which can knock 50-150 points off a credit score, depending on the individual’s credit profile,” says financial consultant Janeil Pierre. Every single missed payment can cause a dip, so it’s crucial to pay all your bills on time. If you struggle with due dates, set up automatic payments or calendar reminders to stay on track.
3. Lower your credit utilization ratio
Credit utilization—the percentage of your available credit that you’re using—plays a huge role in your score. The lower your utilization, the better. Aim to keep it below 30% to show lenders you’re not overly dependent on credit. Paying down existing balances and requesting a credit limit increase can help lower your utilization.
Read this next: “How Often Should I Use My Credit Card?” Answers Here
4. Make good use of your credit card
Using your credit card responsibly is a must to rebuild credit. Once you start your rebuilding-credit journey, make sure you're making small, manageable purchases and paying off the balance in full each month. Avoid maxing out your card or carrying high balances, as that can hurt your score.
5. Reduce debt balances
High levels of debt can drag down your credit score. Focus on paying off outstanding balances, especially high-interest debt, to improve your credit profile. Consider using the snowball or avalanche method to tackle debt strategically.
Both the snowball and avalanche methods are debt reduction strategies that prioritize paying off debts faster by making more than the minimum payment. The snowball method focuses on paying off the smallest debts first, regardless of interest rate, to build momentum and motivation. The avalanche method focuses on paying off the debts with the highest interest rates first to minimize the total interest paid.
6. Clean up negative marks and accounts (and avoid new ones)
If you have collections, charge-offs, or other negative marks on your credit report, work on resolving them. You may be able to negotiate a “pay-for-delete” agreement with creditors or settle accounts for less than the full balance. More importantly, avoid new negative marks by making payments on time and managing credit responsibly.
7. Limit new credit applications and new bank accounts
Each time you apply for new credit, the lender makes a hard inquiry on your report, which can temporarily lower your score. When you apply for too many applications in a short period it triggers multiple hard inquiries and can make lenders wary. Only apply for new credit when absolutely necessary and focus on improving your existing accounts first.
The same applies to opening new accounts in different banks. “It can reduce creditworthiness by triggering multiple hard inquiries on a credit report and lowering your average age of accounts, which make up 15% of your scores,” Pierre says.
Keep going—your credit will recover
Rebuilding credit doesn’t happen overnight, but with patience and consistent financial habits, you can get back on track. “Patience and disciplined financial habits are key to successfully restoring a healthy credit profile and strong credit scores,” Pierre says.
The key is to stay committed—whether that means making on-time payments, using a secured credit card, or exploring alternative credit-building methods. Over time, your credit score will improve, giving you access to better financial opportunities and peace of mind.