Bad Credit Isn't the End: How to Rebuild Your Credit Score and Move Forward

3 MIN. READ

Key takeaways: 

 

• Bad credit can feel overwhelming, but with the right debt repayment plan in place, you can get out faster than you might think.
• You should also consider rebuilding your credit score with tools like secured credit cards, consolidation loans, and credit-builder loans.
• Power Financial Credit Union can provide personalized advice and accessible banking products even for those with bad credit.

Once your credit dips, getting your score back up can be quite challenging. But it’s possible to rebuild credit, and even though it takes time, it’s well worth the effort. With a strong credit score, you can access more banking products, unlock better rates, and build a safer financial future.

Here are some strategies for fixing your bad credit.
 

What Causes Bad Credit?

Before proceeding with credit repair, it’s important to determine what caused your situation. Missed payments and maxed-out cards might come to mind, but these are only symptoms.

The true causes of bad credit are often unexpected setbacks, like medical bills, job loss, or even a car repair bill. Adopting good spending habits is a great start, and it will eventually lead to a well-balanced budget. However, you should also look into saving for an emergency fund so unexpected bills don’t derail your finances.
 

How to Take Back Control If You Have Bad Credit

The first step to rebuilding your credit score is to take control of your current debt:
 

• Get a free copy of your credit report and check it for errors. 
• Don’t ignore your creditors. Reach out and talk to them about repayment plans. Fee waivers, payment plans, and hardship programs might be available.
• Next, look into getting a consolidation loan. These loans consolidate several payments into a single one to avoid missed due dates and potentially improve repayment terms.
• Adjust your budget to account for debt payments.

Besides living frugally and avoiding new debt, you should consider boosting your income. A new job or side gig can make a major difference in getting out of debt.
 

Bad Credit Credit Cards and More: Credit Tools That Work

With your debt under control and on its way to being paid off, you can look into how to rebuild your credit score:
 

• Secured credit cards are a great way to get started. You can qualify even with bad credit since these cards require an initial deposit. You can then use it for small recurring purchases.
• If possible, become an authorized user on a relative’s credit card to increase your available credit and add an old account in good standing to your credit report. 
• Credit-builder loans are worth considering. These loans are typically for small amounts and come with short repayment terms.

If you decide to use these tools, keep your credit utilization rate under 30%. Prioritize using debit for your purchases and only charge when you can easily repay to your secured card.
 

Why Credit Unions Help More Than Banks

We often hear about members who are having trouble getting a credit card or credit-builder loan from a bank because of their bad credit.

Banks handle a huge volume of customers, and often make their decisions based on your credit score alone. Credit unions work very differently.

Because we operate on a smaller scale, we can take the time to review each application and look at other factors beyond your credit score. For instance, a steady job can be enough to help you get a bad credit credit card. 

Plus, you can count on us to deliver personalized support if you need help rebuilding your credit and are unsure which products are right for you.
 

Rebuild Your Credit With Power Financial Credit Union

PFCU representatives are here to help with your credit. We can discuss your situation and devise a realistic plan for repaying your debt and restoring your credit score.

We also offer flexible banking products, including credit cards and loans you can qualify for even if you have bad credit.

Ready to take the first step toward better credit? Our debt consolidation loan calculator will help you figure out how quickly you can repay debt. We also invite you to contact us or stop by one of our South Florida branches for personalized credit-building recommendations.
 

FAQs About Rebuilding Credit

How can I get a credit card with bad credit?

Look into secured credit cards or credit cards designed for young adults with no credit. These products usually have low credit requirements.
 

How do consolidation loans work?

A consolidation loan helps you pay off multiple credit cards and loans. You end up making a single monthly payment and can sometimes secure better interest rates and terms when consolidating.
 

How long does it take to rebuild credit?

Once you have a clear plan, you'll see a difference in your finances right away, and your score should start going back up within six months of following it.