Having a stellar credit score is important if you want to buy a home, apply for a loan, buy a car or obtain a credit card, among other things. Whether it’s through a credit card or loan, overspending and not keeping track of your payments can cause you to incur fees and can ultimately damage your personal credit score.


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Your credit score can improve, but it may take years. A good way to go about rebuilding is to use two main types of credit — revolving (debt you can build up and pay down) and installment loans (debt that’s repaid in installments).

1. Become an authorized user

Most credit cards have an option to add an authorized user. This is when a credit card owner adds someone else to their account. To receive this card, the card issuer does not look at the authorized user’s credit history, it relies on the main account holder. It does however, help the main user build credit, as it will show up on their his/her report. However, keep in mind that the authorized user can affect the main cardholder’s credit, so it’s important to be responsible with spending.

Perhaps you can ask your friends or family members if they would be willing to add you as an authorized user. Most credit cards do not charge to add additional users.

2. Secured credit cards

Obtaining a secured credit card is a great option for building your credit. Anyone can open a secured card with a cash deposit. The lender will issue you a line of credit, which will usually be an amount between 50 and 100 percent of the deposit. For example, if you put down $1,500 for a deposit, you will have between $750 (if the issuer gives you 50 percent) and $1,500 (if they choose to give you the full amount), depending on the lender.

You use this card as if it was a regular credit card, however, if you fail to pay at the end of the month or pay late, the fees are significantly higher and your lender can end up keeping your deposit.

Once you get into the routine of paying your bills on time, you will be on the road to building your credit.

3. Personal loans

It could be very beneficial to speak with a credit counselor about taking out a small loan in hopes to rebuilding your credit. The smaller the loan, the better it will be, especially if you don’t have the financial means to take out such a big debt.

There are personal loans you can receive for as a little as $150. The best way to build credit is to use it and pay it back. It isn’t about how high of an amount the loan is taken out for, it’s whether you are making timely payments on it.

4. Negotiate with debt collectors

As you rebuild your credit, another step you can take (that could speed things up and make your life that much easier) is negotiating with debt collectors. When it comes to your credit score, it doesn’t show how much you paid to the collector, it just shows whether or not you paid it off.

If you decide you’d like to negotiate, explain your financial situation and see if the collection agency is willing to work with you. If you are able to come to an agreement, it’s imperative you get the new deal in writing.

Paying off debt that went into collections won’t change your credit overnight, but it will take away one negative rating on your credit.

The following are recovery times to keep in mind when repairing your credit score, according to FICO:

  • Late payments: 7 years
  • Foreclosures: 7 years
  • Collections: typically 7 years, depending on the age of the debt being collected.
  • Public Record: typically 7 years
  • Chapter 13 bankruptcy: 7 years
  • Chapter 7 bankruptcy: 10 years
  • Unpaid tax liens: no expiration date


10 Steps to Help Erase Errors on Your Credit Report

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  • Taypotts

    Your first suggestion doesn’t really make sense for helping someone fix their bad credit. If someone has bad credit and gets added on as an authorized user, how does that help THEM repair credit? The credit company doesn’t report it on their report so it would ONLY benefit the main card holder??

    • Ms. Maryland

      The persons tradeline does report to the credit report of the person who was added as authorized user.

  • highinterest

    I was a bad boy years ago. I went broke, filed bankruptcy, was foreclosed on. Then I came into some money and either paid everyone in full or paid negotiated amounts per agreement.
    Now it has been almost a decade since I filed. I have no real estate (I rent), no loans, pay all my regular bills on time, and pay my modest credit card charges in full each month. So what has happened to my credit score? It has gone DOWN lately. The alleged reason is that I have no loans and don’t use much of my available credit! One reporting agency says I have too many cards, another says I have too much credit available and unused (WTH?); one says I have delinquencies when I don’t, another says it’s a problem because I don’t own any real estate.
    I want to buy a home soon, and could pay cash, but I’d like to take out a modest mortgage so I can buy a little more home. However, I feel like the credit reporting agencies are holding my past transgressions against me longer than they should, and are engaging in double-talk when explaining why my score keeps declining.