Home > Credit Score > A Crash Course to Moving On From Bad Credit

Comments 0 Comments

So, you’ve decided to get serious, fix your credit issues and build healthier credit. Way to go! Often, the first question I’m asked by folks working to improve their credit is, “How long will it take for my credit score to improve so I can … buy a home, pay for my wedding, afford college and so on?”

If you’ve paid more than 30, 60 or 90 days late on accounts, your creditors will report that to the major credit bureaus and the derogatory information can remain on your report for approximately seven years. If you ignored a collection that was reported to the bureaus, it will stay on your credit report as well. However, you can start the healing with a plan.

Much of your success in raising your credit score and how long it takes depends on you. But if you stick to my plan, which I’ve outlined below, you’ll be on the fast track to healthy credit.

First, let’s agree on what not to do:

  • Pay your bills late.
  • Remain disorganized.
  • Max out your credit cards.
  • Lack a plan.

Below, I’ve mapped out your plan. Follow these steps and you will be on your way to a healthier credit score.

1. Order Your Credit Reports

Your first step to healthy credit is knowing where you stand. Starting now, order your credit reports. (You can pull your credit reports for free each year at AnnualCreditReport.com and see a free credit report summary, updated every 14 days, on Credit.com.) You may want to check all your credit reports twice a year, though you’ll likely have to pay for a second set. It’s a great way to track your progress, as well as keep an eye on your credit accounts to watch for any signs of fraud or identity theft. Examine reports carefully for any inaccuracies, and have the appropriate creditor and credit bureau correct them.

2. Keep Balances in Check

To raise your credit score, you will need to pay down any revolving credit balances worth up to 20% of your total credit line. Keep balances at those low levels by not charging up your credit cards and making sure you pay down new charges.

3. Resolve Accounts in Collections

If you have any accounts in collections or late payments due, take care of them as soon as possible. If you paid accounts late in the past but now pay them on time, you’ll stop receiving late charges. A collection that gets paid will be reported as such and remain on your credit report.

4. Rebuild With New Accounts

Once you’ve addressed the credit issues of the past, begin to rebuild your credit by making sure you have a nice variety of credit accounts. Consider taking out a credit card, car loan, mortgage, store credit card or even a secured personal loan. The key to a good variety is not getting in over your head, so be smart and conservative.

With these few simple steps, you will be on the quickest route to building healthier credit and achieving your financial goals.

More on Credit Reports & Credit Scores:

Image: valentinrussanov

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team