How to build credit with bad credit?

How to build credit with bad credit?

Having a bad credit score can make it challenging to access credit and loans, which can make it harder to achieve your financial goals. Building credit with bad credit is not an easy task, but it is possible with a few simple strategies. In this article, we will discuss how to build credit with bad credit.

Check your credit report and score

The first step in building credit is to understand where you currently stand. Check your credit report and score from the three credit bureaus – Equifax, Experian, and TransUnion. You are entitled to one free credit report every year from each bureau through Review your credit report to ensure that there are no errors, and if there are, dispute them with the credit bureau.

Consider a secured credit card

A secured credit card is an excellent option for building credit with bad credit. These cards require a security deposit that serves as collateral for your credit limit. The deposit typically ranges from $200 to $500 and is refundable when you close the account or upgrade to an unsecured card. A secured credit card reports to the credit bureaus, so making on-time payments can help improve your credit score over time.

Become an authorized user

If you have a family member or friend with good credit, consider becoming an authorized user on their credit card. As an authorized user, you are not responsible for making payments, but the account history will be reported on your credit report. Ensure that the primary account holder makes on-time payments and maintains a low credit utilization rate to benefit your credit score.

Apply for a credit builder loan

A credit builder loan is a type of loan designed to help people build credit. Unlike a traditional loan, the lender holds the loan amount in a savings account, and you make monthly payments towards the loan. Once you pay off the loan, you receive the loan amount plus any interest earned. The lender reports your payments to the credit bureaus, which can help build credit over time.

Make on-time payments

One of the most critical factors in building credit is making on-time payments. Payment history accounts for 35% of your credit score, so it is essential to pay all bills, loans, and credit cards on time. Set up automatic payments or reminders to ensure that you never miss a payment.

Keep credit utilization low

Credit utilization, or the amount of credit you use compared to your credit limit, accounts for 30% of your credit score. Keep your credit utilization low by using less than 30% of your available credit. For example, if you have a credit limit of Rs. 100000, keep your balance below Rs. 30000.


Building credit with bad credit is possible, but it requires discipline and patience. By following these simple strategies, you can improve your credit score over time and achieve your financial goals. Remember to check your credit report regularly, make on-time payments, and keep credit utilization low. With time and effort, you can build a positive credit history and improve your financial future.

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