Definition
Credit rehabilitation is the structured process of rebuilding a credit score after negative events. Mortgage lenders examine the recent credit pattern as much as distant history.
Recommended steps: 1. **Secured credit card**: deposit $500-$1,000 as security, use < 30% of limit, pay in full each month. Result: R1 history visible after 12 months. 2. **Credit-builder loan**: some credit unions and fintechs offer small loans whose payments are reported to credit bureaus. 3. **Become an authorized user**: being added as an authorized user on a relative's credit card with excellent credit can quickly improve the score. 4. **Limit new inquiries**: each credit application generates a hard pull that temporarily lowers the score.
Typical timeline: 12-24 months of exemplary behavior is often sufficient to reach a score of 650-700 from 550.