Credit Scores & Credit Monitoring What To Do About Bad Credit How to Rebuild Bad Credit and Improve Your Credit Score Make Your Way From Bad Credit to Good Credit By LaToya Irby LaToya Irby Facebook Twitter LaToya Irby is a credit expert who has been covering credit and debt management for The Balance for more than a dozen years. She's been quoted in USA Today, The Chicago Tribune, and the Associated Press, and her work has been cited in several books. learn about our editorial policies Updated on March 19, 2022 Reviewed by Cierra Murry Reviewed by Cierra Murry Cierra Murry is an expert in banking, credit cards, investing, loans, mortgages, and real estate. She is a banking consultant, loan signing agent, and arbitrator with more than 15 years of experience in financial analysis, underwriting, loan documentation, loan review, banking compliance, and credit risk management. learn about our financial review board In This Article View All In This Article Start Getting New Credit Accounts Build Better Credit Habits Pay Everything on Time The Bottom Line Photo: The Balance / Maritsa Patrinos A low credit score doesn't have to follow you forever. You can rebuild your credit by raising your credit score little by little. Getting rid of the negative credit report information and catching up on past due bills is the best way to start rebuilding bad credit. Raising your score high enough to get approved for credit cards and loans and qualify for better interest rates means going beyond these initial steps. You'll also have to prove to new creditors and lenders that you can handle credit responsibly and won't default on new applications if you're approved. Starting is the hardest part, but once you build momentum, you’ll be on your way to a good credit score. Start by Getting New Credit Accounts If bad credit has left you without any open and active credit accounts, you'll have to get at least one new account on your credit report. You may be hesitant to use credit cards again, but avoiding them makes it more difficult to rebuild your credit. Using a credit card the right way will help you establish a positive payment history and put you on track to building a better credit score. Having a low credit score makes it hard to get approved for a credit card from a major bank. Fortunately, you still have some options, even with poor credit. A secured credit card, for instance, is a solid option for re-establishing credit in your name. With a secured credit card, you deposit funds with the credit card issuer. You're issued a credit card with a limit that typically matches your deposit. If you stop making payments, the issuer uses your deposit to pay off your card. If you establish a record of on-time payments, some issuers will make your card unsecured and return your deposit. Note Don't apply for too many credit cards at once. Each application affects your credit score, making it harder to get approved for another account. Two Types of Cards to Avoid While you're on the hunt for a new credit card, watch out for subprime credit cards. These cards prey on people with bad credit. They often have high interest rates and extremely high fees that make credit unaffordable. You could easily find yourself right back in debt with damaged credit after trying to rebuild with one of these credit cards. Prepaid cards also aren't a great tool to rebuild bad credit. While you can get a prepaid card regardless of your credit history, they don't report to credit bureaus because they're not credit cards. No matter how responsible you are, using a prepaid card won't help your credit. Note If you have a credit card application denied, you'll get a letter in the mail telling you the specific reasons for the denial. These details give you more information about how creditors view your credit and factors that could play a role in future credit card applications. Build Better Credit Habits To build new credit, you must replace your credit-damaging spending habits with financially sound ones. If you keep the same habits, you could end up with damaged credit again. To improve your credit, make an effort to stop charging things you can’t afford, paying just the minimum, and skipping credit card payments. Improving your credit score means staying well below your credit limit and paying your credit card bills on time, preferably in full. Creating and following a budget can help you be more aware of where your money is going, which can help you avoid using credit cards. Old habits might be more comfortable and hard to overcome, but remember that they led to you having bad credit. Improving your spending habits will help raise your credit score. Pay Everything on Time Your payment history is the most important factor for rebuilding your credit. Even if a payment isn't regularly listed on your credit report, it can eventually wind up there if you fall behind on payments. Avoid falling behind on any accounts, even small ones like library fines, school lunches, and medical bills. More businesses are using collection agencies to follow up on their unpaid customer accounts. If one of your accounts goes to collections, it gets reported to the credit bureaus and damages the progress you've made. The Bottom Line Your bad credit won’t improve until you show your creditors that you have what it takes to build a good score. That means charging only what you can afford and paying bills on time each month. During this rebuilding period, don’t take on too many credit cards because it can get hard to manage your balances and payments. One or two credit cards is plenty to get you started. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. FICO. "What are the Minimum Requirements for a FICO Score?" Consumer Financial Protection Bureau. "CFPB Orders Subprime Credit Card Company to Refund $2.7 Million for Charging Illegal Credit Card Fees." Consumer Financial Protection Bureau. "What is the Difference Between a Prepaid Card, a Credit Card, and a Debit Card?" FICO. "What's in My FICO Scores?" Equifax. "Collection Accounts and Your Credit Scores."