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How to rebuild credit

Individuals 04.12.2021 2 MIN

This article was originally published on


Struggling to improve your credit? Read about how a fellow struggler crawled up from what seemed like a never ending hole of debt.

A job loss, unexpected medical bills or accumulating significant debt can hurt your credit if you fall behind on your payments and it may seem impossible to get back on track. Yet Lucas J., a 40-something university professor, was able to do it through a combination of efforts that included creating a plan to manage his debt and financial discipline.

When he graduated from college, Lucas already had $4,000 in credit card debt—and a decade working in the music industry right out of school didn’t provide much financial stability.

“I never made more than $20,000 after taxes, but I tried to live way beyond my means and had to start paying for my debt,” says Lucas. “I never missed a payment, but I created more debt paying for that debt.”

Graduate school added another layer of debt. Lucas says that if he hadn’t qualified for an-income based repayment plan that’s available for federal student loans, his monthly student loan payment would have been $2,700. That would be in addition to his monthly minimum credit card payment of $2,000.

“One day, I just couldn’t pay anymore,” he said, “and I knew that I would not be making significantly more after graduate school.”

Lucas called his issuer. “I said, hey, I’ve never missed a payment, but it’s blood from a stone at this point,” he remembers. He then worked with a representative who was able to create a payment plan that included paying $500 a month over 60 months at 0% interest.

"The first step to managing debt is to find what you owe, and whether there are any errors that are negatively affecting your score."

Using this as a starting point to pay down his debt, Lucas cut way back on discretionary spending and paid down his balance over a five-year period. Today, his credit rating is in a respectable 700-plus range, but he has to guard against falling back into bad habits. “The temptation for new cards is always there, now that banks want me again,” he said.

If you have debt and a poor credit score, here are some steps to take to get back on track:

  1. Review your credit reports. The first step to managing debt is to find what you owe, and whether there are any errors that are negatively affecting your score
  2. Report errors. If you find an error in your report—like a loan you’ve already paid off or one that you never took out in the first place—report it to the credit reporting agency
  3. If you can’t pay your debt, reach out to creditors. Ask them for help. If you’ve made payments reliably, they may be willing to reduce the interest rate or even forgive part of the debt
  4. Stay the course, even after debt’s gone. Once you’ve repaid your debt, make a realistic budget, based on your earning power and your basic needs, and cut down on unnecessary spending


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