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Struggling With Bad Credit? These Four Steps Can Get You Back on Track

Updated on May 23, 2018

It happens to the most financially responsible among us. Whether you’re paying down student loans, working to get back on track after a period of irresponsible spending, or even recovering from an incident of identity theft, there are myriad reasons why your credit score might not be where you’d like it to be. The good news? There are plenty of resources available to help you regain your footing, build that number back up, and assure future lenders that you can be trusted with a large sum of money. Let’s take a look at four steps to take to get your credit back on track today.


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1. Pull your credit report quarterly.

Did you know that you’re entitled to one free credit report from each of the three major credit bureaus every year? These include Equifax, Experian, and TransUnion. If you inquire about your score more often, you could be penalized, but not if you stick with an annual check. As each will provide you with slightly different data angles, it’s worth it to hop online and perform this step every four months, using a different reporting bureau each time.

Doing so can reveal tons of information on where your credit score stands and potential reasons why your number is what it is. Understanding this information is critical to taking any next steps to remediate it, so do this first. Begin by scanning the report for any mistakes. While experts are divided on the exact percentage of Americans that have inaccurate data on their credit reports, the reality is that millions of consumers are affected by them every year. If you have even the slightest doubt or hint of confusion over anything you see on your report, contact the agency and investigate it fully.

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2. Get your existing debts down as much as possible.

It might sound rudimentary, but to raise your credit score, it helps to have as low of a balance on your outstanding debts as possible. Identify if there are any routine bills (think your mortgage, car payment, student loans, etc.) where you could pay more than the required monthly minimum amount to pay that debt down more quickly.

If you have a history of late or missed payments in the past, this step is especially important. While you might not be able to go back in time and pay those bills on time, you can make an effort to correct that routine moving forward. So, get serious about tackling your debts and you’ll be on the right track toward setting your score straight.

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3. Consider paying off older debts.

Any debt that you’re carrying around can affect your credit score. Yet, the truth is that a debt older than two years has already negatively impacted it and is likely causing the damage you’re trying to reverse today. While it’s imperative that all of your outstanding payments are eventually made, it will be more helpful in the short-term to tackle those current debts now, then focus on the older ones down the road. Why?

While paying them off now can help relieve financial stress and pressure, it won’t change your score immediately. If you need to improve your score to secure a loan as soon as possible, you’ll need to focus on making more immediate changes. While there are some routes you can take to secure a loan with a low score, most lenders will keep that number top-of-mind when considering your eligibility. Consider all outdated debts on a case-by-case basis. Then, create a timeline of payments to make sure all of them are absolved.

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4. Set up a payment calendar.

It won’t do you much good to get your credit score back on track now, then fall back into an old habit of missing payments. Doing so will kick the number back a notch and could leave you further behind than before. Once your score is back up, make sure to keep consistently paying your bills on time.

To do so, it can be helpful to set up a payment calendar. Whether this is a paper version you keep by your desk or an online one that sends you automatic reminders when one a bill is due, there are a few routes you can take to stay on track. You may also want to consider setting up automatic draft payments. These will come directly out of your checking or savings accounts at the same time each month so you’ll never have to manually mail a bill or hop online to pay. This takes both the guesswork and human error out of the equation and can help you become more diligent and responsible with your routine payments.

Ultimately, getting your credit score back on track takes time, patience, and dedication. Yet, no matter how low it currently is, there are plenty of resources to help you reclaim your financial freedom today. The key is to understand that your score didn’t drop overnight and it’s not going to shoot back up that quickly either. Taking the time to adjust your spending habits for the long-term is the first step toward a lifetime of making healthy and smart financial decisions.

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