A low credit score can feel like a major hurdle when considering a newer car, but rebuilding your credit is possible with patience, consistency, and the right approach.

Whether your credit has been harmed by missed payments, repossession, foreclosure, or bankruptcy, proactive measures can help you regain control.

Here’s how to rebuild bad credit while avoiding common pitfalls:

Understand what’s hurting your credit

Before making improvements, it’s important to familiarize yourself with the factors that negatively impact your credit. Some of the most common reasons for bad credit include:

• Late or missed payments – Payment history accounts for 35% of your score. Even a single late payment can have a lasting effect.
• High credit utilization – Using more than 30% of your available credit can signal financial stress and lower your score
• Defaults and collections – Accounts that have gone to collections or been written off by lenders damage your credit standing
• Bankruptcy or foreclosure – These events can stay on your credit report for up to 10 years, but their weight lessens over time
• Multiple hard inquiries – Applying for multiple credit accounts within a short period can ding your score and make you appear “high-risk”

Key steps to rebuild your credit

1. Pay your bills on time

Consistently making on-time payments is crucial, as payment history plays a significant role. Set up automatic payments or calendar reminders to never miss a due date. Even paying the minimum amount on credit cards and other financing can prevent further damage to your score.

2. Reduce your credit utilization

Lenders look at how much of your available credit you’re using. To improve your score:

• Keep your balances below 30% of your credit limit (15% is even better)
• If possible, pay off recent charges before your statement closing date
• Request a credit limit increase — but only if you can resist overspending

3. Avoid unnecessary new credit applications

A hard inquiry appears on your credit report with each new application. Too many inquiries within a short period can lower your score. Only apply for credit when truly needed, and manage your existing accounts responsibly.

4. Don’t close old accounts

Closing older credit accounts can truncate your credit history. Keeping these accounts open can benefit your credit utilization, too.

5. Consider a secured credit card

A secured credit card can be useful if you’ve had difficulty getting approved for a traditional credit card in the past. These cards require a refundable deposit but will report responsible credit use to the credit bureaus.

6. Check your credit reports for errors

Mistakes like incorrect balances or accounts that don’t belong to you can hurt your score. You can obtain free copies of your credit reports from AnnualCreditReport.com to monitor for inaccuracies. If anything looks amiss, dispute it with the credit bureaus.

7. Pay off any remaining debts

If you still owe money on past-due accounts, work on paying them down. You can negotiate a settlement or payment plan if the debt has been sent to collections. Reducing your outstanding debt can help improve your credit score over time.

8. Build positive credit habits

Rebuilding credit is a long-term process, so developing good financial habits is key:

• Stick to a budget – Track your income and expenses to ensure you live within your means.
• Limit new debt – Avoid taking on additional financing and credit lines.
• Communicate with lenders – If you struggle to make payments, contact your creditors to discuss hardship options.

Be patient and stay consistent

Rebuilding credit doesn’t happen overnight. It takes months and sometimes years of responsible financial behavior to see significant improvements. Stay the course, and your efforts will pay off.

Even if your credit score isn’t where you want it to be — and you need a vehicle now — Credit Acceptance may be able to help you finance one. We work with over 15,000 dealerships nationwide who aren’t afraid of buyers with bad credit. To see how much you may be pre-qualified for, find out online in just a few minutes.