How to Repair Your Credit

6 min read

Last Updated: January 29, 2025

Table of contents

Key Takeaways

Your credit score is based on your credit habits, as recorded in your credit report.
You could repair a low credit score by paying bills on time each month, reducing debts, or increasing your credit limit.
Credit report mistakes could also lower your credit score. If you notice an error, dispute it.

A low credit score could make buying a car, renting an apartment, taking out a loan, or applying for new credit cards harder. Some companies offer paid credit repair services that might improve your credit score. However, there are many things you can do yourself to achieve good credit. You can take steps on your own to rebuild a positive credit history and heal your personal finances. With time, small changes in your behavior could create lasting improvements in your credit score.

What makes up your credit score

Your spending and credit habits determine your credit score. Lenders use your credit score to judge whether you manage credit responsibly.

As you use your credit card, creditors and financial institutions report your activity to credit reporting agencies. They sort the data into your credit reports. Credit scoring agencies, in turn, form your three-digit credit score based on certain factors from your credit report.

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Based on information from MyFICO^®, here are the factors that go into your FICO^® Credit Scorecard in your credit report, but remember other credit scoring agencies may weigh factors differently:

FICO^® Score Factors
Payment History	35%
Credit Utilization	30%
Length of Credit History	15%
Credit Mix	10%
New Credit	10%

As a Discover cardmember, you can stay on top of your recent FICO^® Credit Scores for free on mobile and online with Key Factors that help explain your scores.¹

Ways to repair credit

Repairing your credit takes time and patience. While you may not see a positive change overnight, healthy financial habits pay off. Several strategies can help you improve your credit score. As you develop a plan, consider the issues that have hurt your credit in the past.

Make all your payments on time

You may notice a dramatic drop in your credit score if you’ve repeatedly missed your payment due dates. Late payments could hurt your credit score after being late 30 days or more. Lenders typically want to see a consistent pattern of on-time payments. To rebuild your credit score, try paying your bill before your due date. If you struggle to remember your due date, you may be able to set up autopay. Otherwise, you could set a reminder on your phone or laptop a few days before your due date each month. Building a positive payment history is fundamental to improving your credit score.

Pay past due accounts

The longer your bills go unpaid, the more they may hurt your credit score. After 30 days, card issuers can report missing payments to credit bureaus. Past-due accounts could remain on your credit report for up to seven years, leaving long-term consequences for your financial well-being.

The longer a bill goes unpaid, the more damage it could do to your credit. The impact of missed payments increases after 60, 90, and 120 days. To minimize the harm to your credit, try to cover late fees and overdue amounts as soon as possible. The sooner you repay your past-due accounts, the sooner you can begin repairing your credit score.

Pay off debt to improve your credit utilization ratio

Your credit utilization ratio shows lenders what percentage of your total available revolving credit you’re currently using. Ideally, your credit utilization should be below 30%. A higher ratio may tell lenders you’re overwhelmed or unable to manage your debts.

Regaining control over credit card debts could be challenging if you’re struggling with several growing balances. Making minimum payments may not be enough. A few credit card debt reduction options could help you manage your balances in a new way. You may also take the time to determine which credit card to repay first, based on interest rate or the amount owed. Credit counseling may also help.

As you pay down your debts, your credit utilization ratio should go down, too, especially if you keep accounts open.

Don't close credit accounts once you've paid them off

Once you’ve worked hard and repaid your credit accounts, you may want to close them. Closing accounts helps you so your balances don’t grow, but this doesn’t always work in your favor.

Maintaining a credit account after you’ve paid it off could help you keep a lower credit utilization ratio. Each card’s unused credit limit adds to your total available credit. If you close a card after repaying it, your available credit goes down compared to your balances, increasing your credit utilization.

Closed accounts in good standing typically remain on your credit report for 10 years. However, the average age of your credit cards also influences your credit history. Closing an account you’ve had for a long time reduces the average age of your credit cards. This may hurt your score.

Should you apply for a new credit card?

Applying for a new credit card could affect your repair efforts in a few different ways. Creditors typically run a hard credit inquiry when you apply for a new credit card. This may temporarily lower your score. However, a new credit card may help you build your score by increasing your available credit and decreasing your credit utilization ratio.

A new credit card also allows you to build a positive payment history by paying your balance in full or at least your minimum payment each month by the card’s due date. You could minimize the risk to your credit score by applying for credit cards that offer pre-approval.

You may not qualify for many credit cards if you have poor credit. In that case, a secured credit card could help you build your credit history. Secured credit cards require a deposit. Your credit limit then equals that deposit amount. If you miss a payment on your secured credit card, your card issuer may use your deposit to cover the past-due balance. This safety net makes qualifying for a secured card easier.

Did you know?

If you keep your balance low and repay your credit card bill on time, a secured credit card could improve your credit score.

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Of course, a new credit card may not be the best fit for every situation. If you struggle to limit your spending, you may quickly build a balance on your new card. This may make it harder to get out of credit card debt and repair your score. Before you apply for a new card, take the time to consider your needs and spending habits.

Consider a balance transfer

If you decide to get a new credit card, think about the benefits of a balance transfer. A balance transfer credit card lets you consolidate your high interest debt under one account, often with a low introductory interest rate.

In addition to possibly lowering your interest payments, debt consolidation with a balance transfer can help simplify debt management. Instead of having multiple card payments, you’ll only have one monthly bill to pay.

Check your credit report for errors

Mistakes in your credit report could lower your credit score, so doing your own credit monitoring is important. Credit report errors like marking a missed payment that you made on time, or an open account marked as closed could hurt your credit. Other incorrect information, like errors in your name or address, may not hurt your credit score, but they could still cause errors later.

You can submit a dispute with one or all three major credit bureaus (if only one credit agency has the error, you don’t need to submit to all three) and with your creditor directly. There are a few things you may need for your credit report dispute:

Your name, address, and telephone number
Account numbers for any account you may be disputing
Documents that prove your dispute
A copy of your credit report with the disputed items highlighted

When you submit your dispute, explain in detail what the error is and why it’s wrong. The Consumer Financial Protection Bureau also recommends that you copy any documents you send and keep them for your personal records.

Each major credit bureau will have a slightly different processes for disputes. They typically offer options online and over the phone. After you file a dispute, if the creditor agrees there was an error, they should update your information and notify the credit reporting agency to correct your credit report.

Work with a credit repair service

Non-profit credit counselors receive training and certifications in consumer credit, debt management, and other money matters. A credit repair company can assist with rebuilding credit and creating a low-cost debt management plan where you make a low monthly payment towards your debt. In addition, they may help you understand how you got into debt and how to make better financial decisions.

Repairing your credit may feel daunting, especially if you have debt with more than one credit card company or have gotten behind on your payments. Fortunately, by changing your habits one day at a time, you can repair your credit score and meet your financial goals.

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