Rebuilding credit starts now

Follow this guide to rebuild credit and watch your credit score improve.*
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Good credit opens doors

Rebuilding your credit might not be the easiest thing to do — but it’s worth it. Poor credit signals to lenders and credit card issuers you won’t be able to make on-time payments. That means you might face higher interest rates on mortgages and credit cards, and it can even hurt your chances of renting an apartment.

Luckily, improving your credit is possible. By setting goals and making a plan, you can rebuild your credit and open a world of opportunities you wouldn’t have had before, like lower interest rates on credit cards and loans. With a higher credit score, you can show lenders and credit card issuers you’ll be able to make on-time payments in the future.

The makings of a credit score

It’s just three digits, but this all-important number represents how likely it is you’ll pay your bills on time.
There are different kinds of credit scores, but we’ll focus on your FICO® credit score. Here’s what it’s made of.

15%

Length of credit history

How long all your credit accounts have been open.

10%

Credit mix

Your combination of loans, credit card accounts, retail accounts, and accounts with financial institutions.

35%

Payment history

Payment history of both revolving credit, like credit cards, and installment credit, like a car loan or a mortgage.

33%

Amounts owed

The total amount of debt you owe.

10%

New credit

How many credit inquiries you’ve made in a certain amount of time.
For example, lenders might think you're in financial trouble if you apply for several credit cards within a few weeks.

Credit scores range from 300–850

What might hurt your credit?

Before we get into the steps to rebuild your credit, let’s take a look at a few reasons why your credit score might be negatively impacted.

  1. Late or missed payments.

    Payment history makes up 35% of your credit score. Late payments can stay on your credit report for seven years.

  2. Credit report errors.

    Sometimes, errors on your credit report can negatively impact your credit, like mistakenly reported late payments.

  3. Become an authorized user on someone else’s card.

    When someone adds you as an authorized user on a credit card, your credit benefits just from being on the account — you don’t even have to use the card. This may only have a small impact on your credit, because technically, it’s someone else’s responsibility to repay the debts. Keep in mind, being an authorized user can hurt your score if the primary cardholder doesn't pay on time. Be sure to ask someone you trust.

  4. High amounts owed.

    That means your credit utilization is high. Credit utilization compares your total amount of credit available with the amount of credit you're actually using. Typically, it’s recommended to keep your credit utilization below 30% — the lower, the better.

  5. Too many new accounts too soon.

    If you open several credit accounts in a short period of time, it shows that you might be in financial trouble.

How to rebuild credit

Ready to watch your credit score rise? Here are six tips that could make it happen.
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Make sure your credit report is error free.

Get a free copy of your credit report at AnnualCreditReport.com and review your info to make sure everything looks right. Pay close attention to any unfamiliar accounts, amounts, or addresses. If you find an error, file a dispute with Experian, TransUnion, or Equifax.

Make on-time payments.

This is the biggest factor affecting your credit score, so always try to pay on time, even if it’s just the minimum debt you’re repaying. You could also set up autopayments to make sure you don’t miss a payment. Autopayments are one of the best ways to rebuild credit because late payments can stay on your credit report for seven years.

Keep your credit utilization as low as possible.

As we mentioned earlier, credit utilization is the percentage of your credit limit you’re using. Experts recommend keeping your credit utilization to 30% or less of the limit on a card. Start by bringing down your credit utilization on your cards with the highest limits.

Get a Varo Believe credit building credit card.

With Varo Believe, you can build credit no matter where you’re starting.* First, add money to your Vault for your spending limit. (Don’t worry. You can move what you don’t spend.) Then, use your credit card and pay your balance on-time and in-full. Finally, you can see your credit score directly in the Varo app for free.
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Become an authorized user on someone else’s card.

When someone adds you as an authorized user on a credit card, your credit benefits just from being on the account — you don’t even have to use the card. This may only have a small impact on your credit, because technically, it’s someone else’s responsibility to repay the debts. Keep in mind, being an authorized user can hurt your score if the primary cardholder doesn’t pay on time. Remember to ask someone you trust.

Keep credit accounts open.

This makes up 15% of your credit score. Having accounts that have been open longer make you look better to lenders and credit card issuers. It’s best not to close an account just because you’re not using it.

How long does it take to rebuild credit?

Late or missed payments can last on file for seven years, but they do eventually fall off your credit report.

While there’s no specific timeframe in which you can expect your credit score to grow, you can start doing things right now to improve your score. Follow the steps above, and your credit will improve as soon as you build up enough positive credit history to outweigh any negative marks.

Rebuilding credit FAQ

1. How can I rebuild my credit fast?

To rebuild your credit fast, start by reviewing your credit report and disputing any errors you find. You can also pay your cards more than once a month to help reduce your balance more rapidly. Every positive mark on your credit report helps raise your credit score.

2. How long does it take to rebuild credit history?

It depends on your specific credit history and what issues you need to repair on your credit report. While late payments stay on your credit report for up to seven years, correcting errors on your credit report could positively impact your score within a few months.

3. How can I rebuild my credit after collections or bankruptcy?

It’ll take some work, but it’s possible.

  1. Check your credit report and credit score regularly to make sure everything is right.
  2. Open a new credit account, like a secured credit card or a credit-builder loan as soon as you can.
  3. Ask to become an authorized user on someone else’s credit account.
  4. Always pay on time with new credit accounts and keep your balances low.

4. How can I raise my credit score by 100 points in 30 days?

Good news if your credit score is low: Making small changes can result in a noticeable boost. Here’s what to do.

  1. Pay bills on time.
  2. Pay your cards more than once a month.
  3. Request a higher limit.
  4. Dispute errors on your credit report.
  5. Open a secured credit card account.
  6. Keep your credit accounts open.
  7. Become an authorized user on someone else’s account.
  8. Use a service that adds your bills like rent and utilities to your credit report.

Start qualifying for Varo Believe.

Get a Varo Bank Account today!

Applying won’t impact your credit score.