Young man sips coffee while using digital stylus on tablet

How to Help Rebuild Your Credit

Last Updated: November 21, 2023

5 min read

Key points about: rebuilding credit

Rebuilding credit takes time and there’s no set time period to rebuild your credit, as there are many factors to consider.
Usually, the first step to rebuild credit is to request your credit report and assess your credit history.
Making on-time payments is one of the most important factors in rebuilding credit.

Whether you want to buy a home, get a student loan, apply for a credit card, or even apply for a new job, having solid credit is important.

Simple choices, like paying bills on time and diversifying your accounts, can help you rebuild your credit no matter what shape it’s in. In particular, a secured credit card can help rebuild your credit with responsible use.

Follow these steps to get back on track.

5 steps to rebuild your credit

It’s all too easy to toss bills aside and ignore your debt problems. But the first (and most important) step to financial responsibility is facing the facts. Request your free annual credit report online from the three major credit bureaus (you’re entitled by law to one per year from each credit reporting agency, according to the Federal Trade Commission). Compare the reports, your credit scores, and note any discrepancies or errors.

Once you’ve identified all your open lines of credit, determine your credit utilization ratio on each card. To do this, take your current credit card balance and divide it by your credit limit, then multiply that number by 100. If you owe $1,000 on a card with a $10,000 credit limit, your credit utilization ratio is 10%.

High credit utilization ratios may have a negative impact on your credit score. You might consider the goal to have under 25% utilization on every line of credit in your name. If one of your credit lines has a 90% utilization rate and others are much lower, you could focus on paying down the one with a high utilization rate first (assuming all lines have a similar interest rate).

Sometimes past mistakes can keep you from being approved for regular credit cards. In this instance, you can consider a secured credit card. If you're approved for a secured credit card, you deposit an amount of money up front as a form of collateral to the lender. As you use the card and make regular, on-time payments each month, you can build credit with responsible use. When choosing a secured credit card, be sure the company reports to each of the major credit bureaus.

Payment history is an important factor in building credit, so do your very best to not miss payments on any existing or new debt. Utilize your lender’s online reminders and consider setting up automatic payments if you have a set amount budgeted for debt repayment each month. If you’re in a real bind with making a payment, make sure to make at least the minimum payment due, or contact your financial institution and talk with them about other options. While it’s important to not miss payments, avoid borrowing from high-interest lenders as this may ultimately compound your debt problems rather than resolving them. Understand that finally paying off a debt does not remove the payment history from your credit record. When you pay off a debt, keeping the credit line open can demonstrate long-term responsible use (but maybe stash the card in a drawer if you don’t want to use it).

Once you’ve gotten a handle on responsible spending habits and given your credit score a boost, consider diversifying your credit accounts. Switch or “graduate” from a secured to an unsecured credit card, or apply for a new type of credit, like a car loan, if you need one. Demonstrating your ability to manage different types of credit can help you rebuild your credit. That said, avoid opening multiple lines of credit all at the same time. Each time you apply for a line of credit, it creates a “new credit inquiry” on your credit file, and too many of these in a short period can have a negative impact. Keep this in mind, for example, if in a short period of time you want to open multiple store credit cards at places you shop frequently. responsible use¹

How to rebuild credit with responsible use¹ of the Discover it^® Secured Credit Card

Adding a new line of credit can help you rebuild your credit history. Using the Discover pre-qualification application can let you see pre-approval offers you may qualify for without affecting your credit score.²

Did you know?

If you prefer the ease of using a secured credit card, you can apply directly for the Discover it^® Secured Card. If you can make on-time payments with a secured credit card, you can build credit with responsible use.¹ Unlike some secured credit cards, the Discover it^® Secured Card allows you to earn cash back rewards from every purchase you make on the card.

Learn more

How long does it take to rebuild credit?

There's no set period of time that it takes to rebuild your credit, as various factors contribute to your credit history.

If you’re able to review your free credit report and identify any errors made by the credit bureau, reporting those errors to the credit bureau to correct them may impact your credit history.

If you’ve been a victim of identity theft or fraud, you may find that fraudulent charges (and non-payment of those charges) are the problem with your credit history. Resolving fraudulent charges with both your credit card issuer and the credit bureau that is showing the erroneous charge can help them get removed from your credit report.

Rebuilding your credit takes time and dedication. Whatever your situation, the best time to start working on building good credit is now. By focusing on establishing a reliable history of on-time payments or by using new credit cards to increase your credit mix, you can take the steps to rebuild your credit and make your financial goals a reality.

Important Information >