How to Repair Your Credit in 11 Steps

1. Check Your Credit Report

Inaccuracies in credit reports are rare but may show up from time to time, and depending on the information involved, could negatively affect your credit score. Reviewing your credit report from each of the three major credit bureaus (Experian, TransUnion and Equifax) at least once a year helps you spot problems. You can get copies of your credit reports free from AnnualCreditReport.com.

Review your credit report for the following:

• Accounts: Open credit accounts and accounts closed for up to 10 years appear on your credit report. Look for accounts you don't recognize, payments inaccurately reported as late and other potential errors.
• Personal information: This includes your name and any variations, birth date, and current and past addresses and employers.
• Credit inquiries: Inquiries occur when a company or individual accesses your credit report. Hard inquiries occur when you apply for credit; a hard inquiry you don't recognize could indicate fraud.

Learn more: What to Look for When You Review Your Credit Report

2. Dispute Credit Report Errors

Inaccurate negative information, even if it's just a late payment that was actually paid on time, could lower your credit score. Errors in personal information, such a name or address reported incorrectly by a creditor, won't affect your credit score but should still be corrected. If your credit report contains something you believe is inaccurate, you have the right to file a dispute with the relevant credit bureau.

You can dispute errors in your Experian credit report online, by mail or by phone; TransUnion and Equifax have their own dispute processes. Once you file a dispute, Experian asks the company that provided the disputed information to check their records. Incorrect information will be corrected; information that can't be verified will be deleted or updated.

3. Bring Past-Due Accounts Current

Payments 30 days or more past due can be reported to credit bureaus as late. Because payment history is the biggest factor in your credit score, even one late payment can lower your score. Late payments stay on your credit report for up to seven years.

If you're late but not yet 30 days behind on a payment, pay it immediately. If the payment is already 30 or more days overdue, bring the account current as soon as possible. A payment that's 60, 90 or 120 days late will hurt your credit score more than one that's 30 days late.

Can't afford to make the payment? Contact the lender to ask about hardship options.

4. Set Up Autopay

Payment history accounts for 35% of your FICO^® Score^☉, so once your accounts are all current, keep them that way by setting up autopay. You can generally set up autopay directly with the lender or service provider or through the bank account you use to pay bills.

Automatically paying the minimum payment for credit cards and other accounts avoids late payments. Ideally, though, you should pay the balance in full every month. Make sure there's enough money in your account to cover all your autopays to avoid overdrafts or insufficient funds transactions.

Learn more: How Does Credit Card Autopay Work?

5. Maintain a Low Credit Utilization Rate

Your credit utilization rate measures how much revolving credit you're using relative to your total credit limits. Credit utilization accounts for up to 30% of your credit score.

To calculate your credit utilization rate, divide your total credit card balances by your total credit limits and multiply by 100 to get a percent. Do this for each card you hold and for the total of all your credit cards.

If your utilization rate is 30% or more overall or on a single account, pay down your credit card balances to see a potential boost to your credit scores. The lower your credit utilization, the better.

Learn more: What Is the Best Credit Utilization Ratio?

6. Pay Off Debt

If you're carrying debt balances, make a plan for paying them down. Not only is high-interest debt expensive, but the amount of debt you carry has an impact on your score.

Here are some ideas for how to pay off debt:

• Create a debt payoff budget to free up more funds
• Tackle debt with the debt snowball or debt avalanche method
• Consider taking on a side hustle to put extra money toward your debt

Another option is to consolidate your debt. You can use a debt consolidation loan to pay off your credit cards, then pay back the loan over time in fixed monthly installments. Although debt consolidation loans charge interest, rates are typically lower than credit card interest rates, ultimately saving you money. Plus, one fixed monthly payment can be easier to budget for and pay on time than multiple credit card bills.

Learn more: How to Pay Off Debt Listed on Your Credit Report

7. Avoid Applying for New Credit

Whenever you apply for new credit, the lender checks your credit report. This is called a hard inquiry and can briefly lower your credit score by a few points. If you truly need new credit—such as a debt consolidation loan—don't apply until you find loans you're likely to qualify for.

For example, you can compare personal loans that you're likely to qualify for based on your credit profile. That way, you can get a sense of what rates and terms you have the best odds of being approved for, without doing damage to your credit.

8. Keep Unused Credit Accounts Open

After paying off a high credit card balance, closing the card might seem like a smart move. But closing a credit card can negatively affect your credit score by reducing the amount of revolving credit available to you, which could instantly increase your credit utilization rate.

Even if you don't plan to use them, it's generally a good idea to keep unused credit cards open. If you don't want to pay an annual fee on a card you use rarely, ask your card issuer to consider downgrading your card to one without a fee.

If you're afraid that you'll run up balances on these paid-off accounts again, remove card details from your online shopping accounts and leave the physical cards at home to reduce the risk you'll use them.

9. Apply for a Secured Credit Card

A secured credit card works just like a regular credit card, with one key difference: It requires a security deposit. To open the account, you put down a refundable security deposit (as little as a few hundred dollars), which typically determines your credit limit. If you don't pay your bill, the credit card issuer uses your deposit to pay it.

The security deposit lowers the credit card company's risk, making it easier for you to get the secured credit card even with poor credit. Use the card for small purchases to avoid reaching your credit limit. Paying the balance on time and in full each month can help improve your credit score.

In some cases, your card issuer may let you upgrade to an unsecured credit card after a period proving yourself to be a responsible borrower.

Learn more: How to Get a Secured Credit Card

10. Consider a Credit-Builder Loan

As the name implies, credit-builder loans are designed to help build or rebuild your credit score. Usually for amounts of $1,000 or less with repayment terms between six and 24 months, credit-builder loans work a bit differently than traditional loans. The money you borrow is kept in a savings account or certificate of deposit while you repay the loan in fixed monthly payments.

As you pay back the credit-builder loan principal plus interest, your payment history is reported to the three major consumer credit bureaus. Making timely payments demonstrates financial responsibility and could help improve your credit score. When the loan is paid in full, you'll receive the money in the account. One caveat: Be sure your lender reports to all three credit reporting agencies—not all do.

11. Get Credit Counseling

Challenging situations are always easier when you have some support. Working with a reputable nonprofit credit counseling agency can help you get your credit back on track and keep it there. Credit counselors go over your finances with you and help create a plan to tackle financial issues such as budgeting, managing money and paying off debt.

The National Foundation for Credit Counseling and the Financial Counseling Association of America provide lists that are good places to start searching for a certified credit counselor.

Learn more: What Is Credit Counseling?

The Bottom Line

Remember, credit repair companies can't do anything for you that you can't do on your own and for free. The best way to repair your credit is to focus on good credit management.

You can sign up for free credit monitoring through Experian and check your report regularly to see what's impacting your score. Rebuilding your credit takes time, but be patient and you could see positive results.

In addition to the steps above, consider using Experian Boost^®ø. This free feature credits you for on-time payment of rent, utility, cellphone and certain streaming services bills that aren't normally reported to credit bureaus, potentially giving your credit scores an instant boost.