3 Ways to Rebuild Your Credit After Debt Settlement


3 Ways to Rebuild Your Credit After Debt Settlement

After months of saving up and negotiations with your creditors through your debt settlement company, you’re now debt-free.

What’s better is you got to write off your debts for less! But it’s not all sunshine and rainbows. Becoming debt-free through a debt settlement company is liberating, but it does come with a cost; your CREDIT SCORE! That begs the question, how do you rebuild your credit after settlement? There’s no short answer to that. However, the tips outlined below will help you out.

Get New Credit and Make Consistent, Timely Payments

You’re probably skeptical about this one, as this is how you ended up in your current situation in the first place. However, you need to utilize credit if you are to get your credit score back in shape.

Note, the key here is to build your credit. So you need to ensure you don’t go back to your old habits. What this means is you will get a credit card, use it to zero, and then make sure you make timely, consistent payments after you max it out.

For this, you only need one or two standard credit cards. Why? Well, multiple cards mean you’ll have more payments to make, which may overwhelm you, and that’s how you end up back to square one. If your credit is way too damaged after debt settlement, try a secured or a prepaid credit card.

Pay All Your Bills on Time

Other than your ability to pay your creditors on time, another significant factor that credit bureaus consider while calculating your credit score is how good you are with your bills.

Therefore, apart from using credit and paying it on time, also make sure you pay all your utilities and other bills on time. Whether it is an electricity bill or an outstanding loan, make sure you pay it on time, and if possible, make extra payments.

Don’t Forget to Create a Budget

The point of paying off your debts was to become debt-free and work towards financial freedom. If so, then you need to focus on not only building your credit but also rebuilding your financial status.

The key to doing this and at the same time improve your credit is to avoid debts at all costs. You can only do this if you learn to live within or even below your means.

Another essential step to take is to create a budget. Make sure you can account for each cent you earn and try as much as you can to cut on expenses so you can have enough left to save.

This way, the next time you have an emergency, you will not need to take loans or put yourself in situations that will see you back in debt as you’ll have enough to use from what you’ve saved.

Remember It’ll Take Time

Credit reporting bureaus and credit card companies tend to emphasize so much on protecting one’s credit score that even after this, you may be tempted to take a loan from a friend or any other source to rebuild your credit.

Doing this will only worsen your current situation. Remember, it’s not an overnight process. It’ll take time, but with consistency, you’ll eventually get there. Note, fixing this might even take more than a year.


Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

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