If you’re one of the almost 25% of U.S. adults trying to rebuild bad credit, you should be aware of what specific steps you need to take to raise a low credit score. Poor credit generally means a credit score of 580 or lower. Let’s look at what you need to do to improve your credit score, to make it easier for you to qualify for car loans, credit cards, mortgage loans, and other types of credit.

How to Rebuild Your Credit

You may wonder how to build credit with bad credit. It may seem just too hard to do. But, the principle is pretty simple really. You’ll need to do some basic things right when it comes to managing your credit. As with accomplishing anything worthwhile, to rebuild your credit you should start by making a practical plan for achieving your goal. Here are some of the key things you should include in your plan for rebuilding your credit

Consistently Pay Your Bills on Time

Late or missed payments have a serious impact on your credit score. For some creditors, older negative information counts less than more recent information with many lenders. But, generally, paying your bills on time is critical to your credit standing. When possible, make a budget, and create auto payments, or set up alerts to remind you of payment due dates. Make at least the minimum payments on credit card accounts, but to make significant progress in improving your credit record, you need to bring those balances down to lower percentages of the credit limits.

Start Catching Up on Any Past-Due Bills

You should take some important steps to clear up collection accounts and past-due payments on open loans. Contact your lenders if you are having trouble making your payments. Many will help you with a reduced payment plan used for in-house collection accounts. This is a much better option for your credit standing than having the accounts sent to a collection agency or an attorney for collection.

Examine Your Credit Reports

Request your credit reports every year so you can see what’s showing up on those. Any errors on your report can negatively impact your credit score, so be sure to dispute mistakes and ask to have missing information added to your report. Request your free annual credit report from each of the three credit bureaus:

• Equifax®
• Experian®
• TransUnion®

Get a Credit Card, Even a Secured One

The record you develop in paying on a credit card account is a key component of your credit profile, along with at least one traditional loan account (like a car payment), and, ideally, an account with a line of credit. Even taking a secured credit card, which requires you to pay a deposit, can be helpful in rebuilding your credit. As you use the card and make payments on time, and keep the balance low, that habit can help raise your credit score. Be sure to confirm that the credit card company does report to at least one of the major credit bureaus.

Use Less Than All of Your Available Credit

As mentioned above, you need to keep your credit card balances low, instead of maxing out the cards every month. This keeps your “credit utilization,” which is the percent of your available credit you use, at a level that is attractive to lenders. Maintaining a credit utilization rate under around 30% is recommended. That gives lenders more confidence that you are managing your accounts well and are not stretching yourself too thin with the commitments you’re making to repay the debt obligations you create.

Keep Close Track of Your Progress

In between your annual reviews of your credit reports, you may want to consider signing up for a free credit tracking tool. Many companies offer these, and you might have to expect to receive frequent solicitations from them, but the tools are helpful, including auto alerts when significant changes to any of your credit reports occur. Some of the tracking tools also show your current credit score, which is very helpful in monitoring your progress.

How Long Does It Take to Repair Bad Credit?

How long it will take to rebuild your credit depends on a number of factors. Those include your personal payment history, your current debt ratio (the total amount of your debt payments vs. your income), the age of your credit accounts, the percentage of your available credit you’re utilizing, your mix of credit account types, and other factors. The sooner you can put things in order in your accounts, the sooner you can enjoy having better credit.