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Bad credit: how to rebuild it and which loans to avoid

Late payments, collections or maxed-out cards pull your score down, but not forever. The older a negative record gets, the less it weighs, especially when new on-time payments pile up on top of it.

The plan: stop new damage, add positive history, and if you need money now, borrow at a fair rate instead of a fast one.

The credit ladder
  1. Bank account
  2. SSN or ITIN
  3. Credit builderYou are here
  4. First card
  5. Loans at fair rates

Add positive history

Self

Self

Money back at the end of the term

Monthly fee
From $25
APR
15.51-15.92%
Reports to
All 3 bureaus

on the Self website

Open account
Capital One

Capital One Platinum Secured

Accepts ITIN

APR
29.24% variable
Annual fee
$0
Deposit
$49 / $99 / $200

on the Capital One website

Apply now
Kikoff

Kikoff

From $5 a month, 0% APR

Monthly fee
From $5
APR
0%
Reports to
All 3 bureaus

on the Kikoff website

Open account

Personal loans with APR up to 36%

Check your rate first: at Upgrade the check is a soft inquiry and does not affect your score. Look at the APR and the total you will pay back, not only the monthly payment.

Upgrade

Upgrade

Soft credit check

APR
7.74-35.99%
Loan amount
$1,000-50,000
Term
24-84 months

on the Upgrade website

Apply now

Step by step

  1. 1

    Read all three reports

    Get your free reports at AnnualCreditReport.com. If you see an error, such as a debt that is not yours, dispute it with the credit bureau. That is free.

  2. 2

    Stop new damage

    Bring late accounts up to date and turn on autopay. A new late payment hurts more than an old one.

  3. 3

    Add positive history

    A credit builder account or a secured card adds an on-time payment every month. On a card, keep the balance well below the limit.

  4. 4

    Borrow only at a fair rate

    If you need a loan, check rates where the check does not affect your score, compare the APR and stay at 36% or less.

Questions people ask

Can I get a personal loan with bad credit?

Sometimes. Some lenders look at several factors, not only the score. Check your rate first where the check does not affect your score, and compare the APR, not just the monthly payment.