Life happens. A car breaks down, a medical bill shows up, or an unexpected expense pops out of nowhere. Before your debt settlement, these moments may have pushed you back into credit card debt. An emergency fund helps break that cycle.
Start an Emergency Fund — Even a Small One
Set aside a small pool of money dedicated solely to unexpected costs. Begin with an achievable goal, such as $500 or $1,000. The exact amount matters less than developing the habit of contributing to it consistently. Even a modest emergency fund can protect the progress you’ve made and turn a potential financial crisis into a manageable bump in the road.
Rebuild Your Credit Step by Step
Debt settlement does leave a mark on your credit history—there’s no getting around that. The upside is that credit scores are meant to change, and you can actively rebuild them. By showing lenders that you can handle new credit responsibly, you lay the foundation for a stronger financial future.
Use a Secured Credit Card to Reestablish Credit
One of the most effective tools for rebuilding credit is a secured credit card. It works like this: you put down a cash deposit, and that deposit becomes your credit limit. For instance, a $300 deposit gives you a $300 limit. Use the card for small, manageable purchases and—most importantly—pay the balance on time every month. These on-time payments build positive credit history, which is one of the biggest factors in your credit score.
Credit-Building Best Practices
As you rebuild your credit, keep these guidelines front and center:
Review your credit reports regularly. Check for errors and dispute anything inaccurate—you’re entitled to free reports from each major credit bureau.
Always pay on time. This has the greatest impact on your score.
Keep your balances low. Aim to use no more than 30% of your available credit.
Avoid opening multiple accounts at once. Each application can cause a small, temporary drop in your score.