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3 steps to rebuild credit fast

It's possible for a credit score near 600 to join the 700-plus club in a couple of years.

By MSN Money Partner Feb 25, 2013 1:56PM

This post comes from Barry Paperno at partner site reader Tanya wrote us recently with this question:


Image: Overwhelmed woman © Corbis"My score is 606. At this moment, I only have a Macy's card with a limit of $100. Divorced five years ago, when my ex filed bankruptcy and included the house we had together. At that moment, had credit card debts of $6K (Discover), $2K (Sam's Club) and a couple of debts of under $1K. Since then, I only pay with cash or debit card. How can I raise my score, fast? I would like to buy a property, but I have no idea how to."


While the first thing to grab your attention in her question might have been the ex's bankruptcy, the property she wants to buy, or that Tanya now pays with cash or debit card only, what jumped out at me was not only that she wants her score raised, but that she wants it raised fast.


It should come as no surprise that a number as important as a credit score will often cause people to try almost anything to raise that number as high and as fast as humanly possible. And Tanya is to be commended for apparently not falling for any of the many scams that promise fast credit repair.


So, why is her score only 606? Clearly, her low score is being haunted by the mortgage included in her ex's bankruptcy, some credit card debt and, since she hasn't been using credit, a lack of recent positive credit history.


With an eye toward rebuilding Tanya's credit as fast as possible, the following tips should provide an effective strategy for anyone trying build a good credit score:


1. Make sure your credit reports are accurate.

If a recent Federal Trade Commission study has taught us anything, it's to get your credit reports at least annually and make sure all of the credit information that impacts a credit score is accurate. A good source of credit reports from each of the big three reporting agencies is, where the reports are free annually from each agency. You can also follow your credit report and score monthly with a free credit report card from

2. Make your payments on time and drive your debt down.

Bring all accounts current and stay current with your monthly payments. For any accounts you're unable to bring current, contact the lender to make payment arrangements. If you have multiple problem accounts, a debt management plan with a nonprofit credit counseling agency can resolve both the payment history and debt-related problems keeping your score down. Or if you can go it alone, you can raise your score by aggressively reducing your credit card debt while paying no more than the monthly minimum on mortgage, auto and student loans.


3. Start developing a positive credit history.
As I've written before, one of the best actions you can take for your score, based on one of the least understood scoring factors, is to add some recent positive credit history to the older bad credit. This shows that you're currently managing credit successfully, not just avoiding it.


One of the best ways to get back into the credit world -- which, like it or not, you'll have to do if you want to buy property one day: A secured credit card (or two), paid off each month and showing a statement balance of less than 10% of the credit limit, will go a long way toward proactively helping to raise your score.


Tanya's fast solution
Despite her ex's bankruptcy and previously high credit card balances, Tanya could see a higher score simply by substituting a secured credit card (or two) for the cash and debit card she's using instead of credit.


And if she can reduce her credit card debt, she could be in the 700-plus club within the next year or two, which, considering how long it took Tanya to arrive at her current credit situation, is actually pretty fast.


More on and MSN Money:

Feb 25, 2013 3:04PM

Beware of debt management plans when trying to get back on track with credit because the FTC has found that some organizations that offer DMPs have deceived and defrauded consumers, and recommends that consumers check their bills to make sure that the organization fulfills its promises.


If you need help with credit problems or repair, use a free consumer organization such as "Bad Credit MD"



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