6 Steps to Building (or Rebuilding) Your Credit Score

While these steps are specifically designed to help consumers with poor credit to rebuild their rating, they can also help consumers who have no credit rating to get established.

1. Pull your credit report at AnnualCreditReport.com and review and clean up as discussed previously.
2. Ask a trusted family member if they would be willing to add you to their credit card account as an authorized user. You do not need to use or even see the card when it arrives, but you will benefit from your family member’s good credit without your own poor credit affecting him or her.
3. Ask your utilities and cell phone service provider to report your history of on-time payments to the credit bureaus. Not all such companies are in a position to do so, but many can. Consider using a free service like Experian Boost.
4. If you already need new tires or brake work on your vehicle, save up the money in cash and then apply for a line of credit at the tire shop, which usually offer credit accounts even to those with no credit or somewhat challenged credit ratings. That same evening, link your bank account to the line of credit and pay off all but a small amount, so you are not incurring interest on a large balance. Then, make payments on the account for the next six months or so until the account is paid off in full. You can do the same thing with a retail or gas card.
5. Find a bank or credit union that offers a secured credit card and that reports activity on the card to the credit bureaus. Shop around, since many charge annual and even monthly fees. Be prepared to put down $300 to $800 as collateral in order to open the account. You will get the money back once you can convert the account to a standard credit card or you close the account in good standing.
6. Find a bank or credit union that offers a credit builder loan. Typically, the lender will place your loaned money in a secured account that you cannot access until after you have made monthly payments for a year or paid off the debt.

Building and rebuilding credit can take time, so be patient. We have had clients go through bankruptcy, work hard for the next two years to rebuild their credit, and qualify for a home loan with excellent interest rates and terms.

What about a general approach to building and caring for your good credit? The next few lessons will finish up your credit building journey with a plan.