Low Score Got You Down? How to Establish or Rebuild Your Credit

I’m no credit expert, but I know there are plenty of wrong ways to go about trying to establish or rebuild your credit. We hear advertisements for these services on the radio all the time. You may even see ads for their services here on my blog (not my choice). With the help of the NFCC though, today I’d like to share some of the best (scam-free) tips for establishing or rebuilding your credit.

There are many good reasons to have a positive credit history. Scoring a good deal on a mortgage or auto loan are the first two that come to mind. Beyond that, it’s nice to have positive credit when applying for a job, an apartment, auto insurance, even cell phone service. It’s hard to escape the need for good credit in our lives. That being the case, you’ll want to put your best foot forward.

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Keep in mind, the following advice isn’t meant for those who find themselves stuck making poor choices with their credit. If you are totally clueless about credit and have trouble reeling in your spending, consider reading some Dave Ramsey.

Establish or Rebuild Your Credit

Here are some things you can do to establish or rebuild your credit:

Get Your Credit Report – You can get your credit report from many different places, but only one, annualcreditreport.com, is truly free. You can also get your free credit score online for free by using one of the credit monitoring free trials.

Open Checking and Savings Account – While not tracked on your credit report, lenders may ask about any checking or savings accounts you may have and use it to help your cause in lending decisions.

Aim for a Mix of Credit Account – Establishing different types of credit accounts, both installment (car loans) and revolving (credit card), can improve your credit score.

Consider Using a Co-Signer

“Obtaining a loan in the absence of any credit history can be difficult, sometimes requiring a co-signer to guarantee payment. The loan is usually structured where the primary borrower is expected to make the payment, with the pay history reported in both names. If the borrower defaults, the lender will approach the co-signer, and missed payments will be reflected on both credit files. There is somewhat of a risk to the co-signer, but if handled responsibly, co-signing can be an effective way to help another person obtain and build credit.”

Consider a Secure or Prepaid Credit Card – This is a credit card that is tied to a deposit you’ve made to the bank or credit union. In normal situations, if you a apply for a credit card with bad credit, consider that you might be rejected. No one is rejected for a secure or prepaid credit card application.

Take Out a Small Personal Loan – Hook up with a local credit union and open a small personal loan. Pay it off responsibly and look for your score to improve.

What Not to Do

As a bonus, here are some credit fixes that are no-no’s according to the NFCC:

  • Don’t Apply for Too Much Credit
  • Don’t Fall for the Credit Repair Schemes – Building your credit takes time and is hard work. There are no shortcuts.
  • Don’t Pay to Piggyback

The information in this post was provided by the NFCC. If you need financial advice, consider reaching out to an NFCC Member Agency at www.DebtAdvice.org

Last Edited: February 23, 2016 @ 1:08 am The content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.


  1. What do you mean by “Don’t Pay to Piggyback”?

  2. Piggybacking is when your name goes on the loan along with the person who is actually making the payments. Parents ususally do this with their kids to help build their credit. Spouses usually do this with one another to improve scores. This isn’t necessarily a bad thing. But what some people do is pay total strangers money to be put on a loan with them. They pay to piggyback. This is not illegal, it’s just gaming the system. And FICO is beginning to crack down: Can You Piggyback on Credit?

  3. Question… let’s say you are on time on all 10 of your accounts, except for one credit card. You’re late on the AMEX every single month b/c you don’t get reimbursed in time by the firm. Is there only so much your credit score can go down?

  4. Sorry I have to post again and click the “notify me by e-mail” b/c I’m afraid I might forget checking back. Feel free to come to Financial Samurai and post too. thnx.

  5. Good question, Samurai. I think I understand. My guess is that there IS a limit to the negative effects of late payment. Even if you continually do it.

    You couldn’t drive your score to zero because you have good standing with all your other creditors.

    However, payment history makes up 35% of your score (that’s the biggest factor). So, the late payments will have the biggest effect on your score that any mess-up could.

    It should be noted thought that if you’re not able to cover the charges yourself, you should ask your company to pay for the expenses themself. That’s a burden you shouldn’t have to bear.

  6. Hey PT! Thnx for your response man. Yeah, I can’t imagine my credit score go to zero even if I pay my corp card late every month. That wouldn’t make sense.

    The 35% figure is good to know. That’s pretty high.

    Unfortunately for me, my current firm requires us to pay first and then get reimbursed. Expenses sometimes rise to $10-15,000/month which is too much to bear at times. My previous firm used to pay the bill, and I’d just have to write out each expense for records.

    Funny though, I don’t think I’ll be applying for any more debt anymore. I’m looking for a rental property in Nevada, but will probably just pay cash.

    thnx PT.