Ultimate DIY Credit Repair Guide for 2021: How To Repair Bad Credit Yourself

Do you want to repair and raise your credit score on your own? Do you need a credit repair guide so you can do it yourself? You’re on the right page!

To achieve this goal, it’s important to understand the basic credit principles when you want to repair your credit yourself. In this DIY guide, you’ll learn what credit scores and credit reports actually are and how to get them for free.

Also, you’ll learn the right habits you should follow to be a responsible borrower and improve your credit score as well as how to remove negative inquiries that hurt your score from your credit reports.

Learning About Credit Repair

Learning about credit is not that difficult after all. It’s much better to invest the time to learn about it yourself rather than spending money on professionals every time you need help.

This way, you’ll be able to maintain a high credit score and the benefits that come with it. Of course, you’ll avoid high interests and save thousands of dollars throughout your life.

However, if you feel that repairing your credit yourself is too time-consuming, be sure to check out the Credit Repair Firms we recommend.

Your Credit Score – What is it & How to Get It for Free

What Is a Credit Score?

A credit score is a three-digit number that creditors use to determine how a responsible borrower you are. As a result, your credit score mainly determines your loans’ interests and fees and whether or not you are lendable.

Why Is It Important to Have a High Credit Score?

Further, a high credit score lets you enjoy some other benefits like:

• Easier and faster approval for credit cards and loans
• Higher credit limits
• Lower interest rates and fees as mentioned above
• Cheaper car insurances
• Faster and easier approval for rental apartment and houses (landlords often check credit scores to make a decision)
• Lower or zero security deposits for utilities
• More power to negotiate better offers and interests with banks/creditors.

How Does A Credit Score Work?

There’s not only one credit score because there are multiple credit scoring models. The two most popular are VantageScore and FICO Score.

Even FICO has many different credit scoring models, but the most widely used is FICO score 8.

The majority of creditors use the FICO 8 scoring model though.

Both scoring models use the same scale from 300-850, but they weigh differently the major credit scoring factors. The higher the number the better your credit score is.

Here is the credit rating according to your credit score:

Credit Rating	Vantage Score	FICO
Poor	300-499	300-579
Fair	500-600	580-669
Good	601-660	670-739
Very good	661-780	740-799
Exceptional	781-850	800-850

How to Get Your Credit Score for Free

It’s a common misunderstanding that credit reports contain your credit score, but it’s not usually the case.  Credit reports don’t include your credit score.

Fortunately, there are many other ways to get your credit score for free:

1. Your credit cards’ or loans’ statements: The majority of credit card/loan companies and banks have started to provide credit scores for free to their customers. You can check your statements or log in to your online bank/credit accounts.
2. Websites for credit scoring: There are multiple websites that can show your credit score for free. Keep into account that some of them offer educational scores (or estimate your score based on your answers). Some other sites require a small monthly fee and offer credit score tips and monitoring.  Websites like Discover  (click “Get My Score” and follow the sign-up process) let you check your credit score if you sign up for a free account without being their customer.
3. Ask for help from a non-profit credit counselor: You can visit the “National Foundation for Credit Counseling” to find one that can help you check your credit score, credit reports, and other details.
4. Sign Up or Purchase your credit score directly from one of the three major credit reporting agencies (Experian, TransUnion, Equifax)or credit scoring companies (FICO.  VantageScore.

Also, VantageScore provides all legit sources where you can get your VantageScore for free.

How to Get Your Credit Score for Free from all three credit reporting bureaus (Experian, TransUnion, and Equifax)?

Most of the time, all three major credit reporting bureaus offer your credit score for free. You only have to sign up for a free account on their websites.

They also offer paid packages like tips and credit monitoring, but you don’t need to purchase them to simply check your score.

The process is pretty straightforward and similar in all of them. Visit one of the below-mentioned sites:

• Experian
• TransUnion
• Equifax

Then, click on “Get/Check my Credit Score” on the websites’ upper-side. Also, a pop-up window may appear.

Next, you have to fill your personal details and give your email. They may send your credit score in your email and occasionally send you promotional offers.

The Most Important Credit Factors that Affect Your Credit Score?

The credit scoring agencies calculate your credit score based on certain factors and information from the three major credit reporting bureaus (TransUnion, Experian, Equifax).

Your credit score depends on your recent credit activity and more specifically on:

FICO

• Payment history: 35% It indicates your ability to pay your bills before the end of the billing period as well as the absence of collection or delinquent accounts
• Amounts owned: 30% It represents the amount you owe in total and your credit utilization ratio.
• Credit history’s length: 15% It shows the period you’re using credit and the age of your credit accounts
• Credit mix: 10% It indicates all types of credit accounts you’re using like mortgages or student loans.
• New credit 10% Every time you apply for a new credit account, the issuer adds a hard inquiry on your credit report. As a result, a few points are deducted from your credit score. Applying for too many new credit accounts in a short period of time triggers a red flag for potential lenders.

VantageScore 3.0

• Payment History: 40%
• Type and age of credit: 21%
• Percent of credit used:  20%
• Balances and dept: 11%
• Inquiries and recent credit activity: 5%
• Available credit: 3%

Note that you need to use credit at least for 6 months to have a credit score. Also, your creditors must have reported your activity to at least one of the three credit reporting bureaus.

Not all creditors report to all three major credit reporting agencies. This way, your credit score may differ on each bureau. Further, differences between your credit scores may be a result of a mistake. That’s why you should check your credit reports regularly (at least once a year).

How to Build & Maintain a High Credit Score

According to the most important factors that directly affect your credit score, there are some actions you can take to improve and maintain a high credit score.

(For learning how to dispute negative inquiries from your credit reports, check the appropriate section below.)

Make your Payments in Time

As mentioned above, the most important credit scoring factor is “payment history”. The more responsible you are about making on-time payments the better your credit score will be.

On the other hand, every time you delay a payment you sent a negative sign on your credit report. However, one single late payment will not be destructive.  Further, you should know that recent late payments affect your credit score more than older late payments.

You can use calendars or reminders to make sure you pay your bills on time as you’ve agreed.

Note that you should pay on-time not only your credit card bills but also your loans. Also, other payments like phone bills, rents, and utilities can affect your credit score.

Check Your Credit Report & Make Sure It Is Free of Errors

If you’re serious about increasing your credit score, you can’t miss this step. It’s crucial to check your credit reports at least once every 12 months.

You have to make sure that there aren’t any errors in your credit reports that negatively affect your credit score.

Some common examples of errors are:

• Identity theft: No matter how careful you’re about sharing your personal information, your identity might be stolen from hackers or data breaches. It’s important to know that your account isn’t involved in any fraudulent activity
• Misspelled details: Misspelled personal details can have a negative impact on your credit report. For example, positive entries might not be reported correctly or you may be charged with someone else’s negative inquiries. It’s not a very common scenario but it happens.
• Inaccurate inquiries: Every time you apply for a new credit account or loan, issuers make a “hard credit pull” on your credit report. This kind of inquiries deducts a few points from your credit score. However, you should have given your consent to let happen such an inquiry. If you spot that a hard credit pull happened without your permission, you should file a dispute to have it removed off your credit report.
• Reporting Errors: A lot of mistakes can happen like incorrect payments’ date, closed accounts appeared as open, the same debt appeared twice (under a different name), or incorrect balances. It’s your responsibility to check your credit report, spot, and dispute any errors.

Keep Your Balances & Credit Utilization Ratio Low

Your “Credit Utilization Ratio” plays an important role in your credit score calculation. You calculate your credit utilization ratio if you add all the balances of your credit cards and divide this number by the total credit limit. For example, if your total credit limit is $5,000 and you usually charge $1,000 a month, your credit utilization ratio is 20%.

Creditors often appreciate utilization ratios lower than 30%. It’s a signal that you don’t use to max out your credit accounts you probably know how to manage credit responsibly.

Do Not Close Unused Credit Accounts

Keeping your old credit card accounts it’s a wise strategy for two reasons:

1. You keep your credit utilization ratio lower (you owe the same amount but your total credit limit is higher)
2. You show that you’re using credit for a long time. This is also a good indicator of your credit score.

The only case you should consider closing an old credit card account is when they include high annual fees.

Don’t Apply for New Credit Accounts if You Do Not Have to

Opening new credit accounts can increase your total credit limit, but the consequences are probably worse.

When you apply for a new credit account, issuers add a hard credit inquiry on your credit report. Hard credit inquiries affect your credit score negatively for almost two years. If you apply for too many different credit accounts in a short period of time, your credit score will be decreased significantly.

Also, multiple credit accounts that are not necessary can lead you to more debt or missing payments if you don’t handle them carefully.

You’ve already taken the first step for a better credit score by reading this guide. Further following the above-mentioned tips can help you rebuild and maintain a high credit score throughout your life.

Chapter 2: Your Credit Reports – What Are They & How to Access Them for Free

What Is a Credit Report?

A credit report is a file that includes all your activity around using credit. Credit reports include:

• Personal details
• Credit account details (date of payments, balance)
• Inquiries (hard inquiries, details about applying for new credit accounts)
• Public records and collections (bankruptcy, foreclosures)

The credit scoring agencies calculate your credit score based on information reported on your credit reports.

There are three worldwide credit reporting agencies that report all the details that creditors give them:

1. Experian
2. Equifax’
3. TransUnion

Creditors do not have the legal obligation to report your activity on all three bureaus. This is why credit reports and scores may differ depending on the bureau you check.

However, the majority of creditors report all consumers’ activity on all three reporting agencies.

How to Get Your Credit Report for Free

The simplest way to get your annual free credit report is through AnnualCreditReport.com (or call 1-877-322-8228). It’s a website authorized by the US government.

You have the legal right to ask for a free credit report from all three major credit reporting bureaus (one report from each bureau) once a year.

If you don’t plan to make a big purchase, it’s a good strategy to spread the requests for your credit reports throughout the year. This way, you can have more information when you need it.

On the other hand, if you’re going to make a big purchase like a car or a house, you should better request your credit reports from all three bureaus. You should check that all of them are free of mistakes that can raise your credit/loan interest rates.

Under federal law, you’re also eligible for a free credit report if:

• A company denies your request for credit, insurance, or employment (until 60 days after the request)
• You’re unemployed and you want to look for a job in the next 60 days
• Your report has inaccurate details as a result of fraudulent activity like identity theft
• You are receiving welfare

Note that often the three credit reporting bureaus offer more free credit reports. For example, Equifax currently offers 6 free credit reports for each consumer. Also, all three bureaus offer free weekly credit reports until April 2021 due to COVID-19.

For more details, you can reach out to them by visiting their websites or make a phone call:

• experian.com or 1-888-397-3742
• transunion.com or 1-800-916-8800
• equifax.com or Equifax:1-800-685-1111

How to Check & Understand Your Credit Report

Carefully reading and fully understand your credit reports is an important step to improve your behavior as a borrower.

 Further, you’ll be able to understand potential errors and negative inquiries. The point is to recognize what of these inquiries you can dispute to have them removed off your credit reports.

Here’s how to read and what to carefully check in each section of your credit report:

Personal Details

Your personal identifying details are probably the first thing you should check on any of your credit reports:

• Your name
• Reported Addresses
• Birthdate
• Your SSN (Social Security Number)

Make sure all of your personal information is accurate and especially your reported addresses.

Addresses you don’t recognize can be an attempted fraud’s sign.

It’s common to overlook this section of your credit report, but inaccurate personal details can have consequences. For example, your good credit behavior maybe not be reported as it should. Also, you may be charged with someone else’s negative inquiries.

Account Details

Accounts details are also called “tradelines”. They include all the credit accounts you’ve opened or closed. You can learn about purchasing tradelines and how you can create a credit file.

You can see in detail all of your accounts information:

• Type of account
• Date opened
• Balances
• Credit limit
• Payment history
• Other details like “Responsibility” or “Terms”

Obviously, this section (account information) is the most important to check for errors or fraudulent activity. Make sure you recognize all accounts listed in your credit report.

Further, you should pay attention to errors like:

• The same debt listed more than once
• Closed accounts reported as opened
• Inaccurate balances
• The incorrect credit utilization ratio
• On-time payments shown as late payments (it doesn’t happen often but you should still check)

It shouldn’t be difficult to recognize any other important errors that hurt your credit score and credit reports.

Credit Inquiries (Soft & Hard Credit Inquiries)

This section includes the soft and hard credit inquiries related to your account. Let’s make it clear what is the difference between them and what inquiries you should pay attention to.

Soft Credit Inquiries

This kind of inquiries doesn’t affect your credit score at all. A soft credit inquiry occurs every time someone requests to check your credit report, including yourself. It’s not a bad sign related to your ability to manage credit.

Often, soft credit inquiries occur when:

• Insurance companies check your report
• An employer check your report to decide if he should hire you
• The landlords often check credit reports to confirm you’re a responsible payer
• Creditors or banks check your credit report to send you relevant offer
• Phone/Internet companies if you applied to receive their services
• Yourself checking your credit reports

Hard Inquiries

A hard credit inquiry deducts a few points off your credit score (often less than 5-10), so they require more attention.

This type of inquiries happens when you apply for a new credit card account or loan. Your creditors make a “hard pull” on your credit report to decide if they should approve your application and the terms associated with it.

All hard credit inquiries require your consent to occur. This way, you should carefully check if you recognize all the hard credit inquiries listed in your credit report.

If you spot any hard inquiry that happened without your permission, you can file a dispute to remove it.

While a single hard credit inquiry is not destructive for your credit score, multiple hard pulls in a short period of time can deduct many points off your credit score.

In other words, this can happen if you apply for many different loans or credit card accounts in a short period of time.

It doesn’t matter they approved or rejected your credit application. This way, you have to avoid this kind of behavior.

An exception is when you’re on the market for a big purchase like a car and companies checking many creditors to find the best interest rates. As a result, multiple hard credit inquiries happen in a short period of time, but credit scoring agencies count it as one hard pull (as long as they stay within the 14-45 days timeframe).

This way, they will reduce only your points that equal to one hard credit inquiry.

For How Long Do Hard Credit Inquiries Stay on My Credit Report?

They appear on your credit report for 24 months. However, FICO calculates your score only considering those that occurred in the last 12 months.

Usually, your credit reports refer until when each hard inquiry will be visible.

How to Dispute Errors in Your Credit Report (Template Letters)

After you have spotted inaccurate entries on your credit report, you can file a dispute to have them removed.

Normally, you can only remove inaccurate items that you’re not responsible for and they’re a result of errors.

However, many consumers and credit repair companies take advantage of a specific loophole and try to remove accurate negative items from their credit reports:

Lenders/Collection agencies have to provide evidence (when you file a dispute) that you owe this amount within 30 calendar days.

If they fail to do so, they are obligated to contact the credit reporting bureaus on your behalf and have the negative entries removed from your credit reports.

Sometimes, they can’t or they don’t want to spend time to provide the evidence. They may not want to lose you as a customer. As a result, the credit reporting bureaus successfully remove negative but accurate entries from your credit report.

Keep into account that this doesn’t mean that creditors can’t find these successfully removed negative inquiries if they want to. There are alternative reporting agencies that can check and find these entries.

You have the right to dispute an item on your credit report you don’t agree with and ask for evidence that verifies this item.

It’s highly recommended to file a dispute through certified mail:

• You’ll receive a receipt that indicates when your letter is delivered. You can use this information later to prove that more than 30 calendar days have passed without correcting your credit report.
• You have more rights that protect you if you use a certified mail. Although you can dispute an item online or through phone, lenders are not obligated to provide you with documents/evidence according to FCRA (Fair Credit Reporting Act)

If this process sounds too complicated for you, you can consider hiring a credit repair expert to ask for help.

However, you can do it yourself in 2 steps:

1. Send a letter to the credit bureaus that have reported the negative item to dispute it. If you see the negative item on all three credit reports you may want to send a letter to all of them.
2. After the bureaus verified who reported the negative item, you should send a letter to your lender to dispute the negative entry.

Things you should be aware of when disputing negative items:

• Send a letter to the right bureau. You don’t need to send a letter to a bureau that hasn’t listed the negative item.
• Use the template below or the one listed on the FTC website and send your letter through certified mail.
• Include necessary enclosures like your credit report with highlighted the item you want to be removed and any supporting documents like court documents or payment records
• If the credit bureau does not remove/correct the negative entry, send a letter to the lender that reported this item and ask for evidence.
• Also include documents that prove your identity and SSN like your passport, statements, birth certificate, and driver license.
• Do not admit guilt in any way because you don’t have to.

1^st Step: Dispute the Negative Entry with the Credit Reporting Agency

The first step would be to send a letter to the credit reporting bureau that has listed the negative item on your credit report.

There are thousands of templates available online. Note that there’s no specific template you have to follow and you don’t have to mention any laws.

The credit reporting agencies know the law and the process.

You can use the template below to dispute any inaccurate information on your credit reports like incorrect addresses or closed accounts reported as opened.

Here’s one letter template from the FTC (Federal Trade Commission):

[Your Name]

[Address]

[City, State, Zip Code]

[Date]

[Reporting Agency’s Name]

[Address]

Dear Sir or Madam,

I’m sending this letter to dispute the following information in my credit report. I have highlighted the items I dispute on the enclosed copy of the report I received.

 This item [identify the item(s) disputed by name of source, like creditor or court, and identify item’s type like judgment, credit account, etc.] is inaccurate because [mention what is inaccurate and the reason why].

I am requesting that the item be removed [or ask another specific change] to correct the information.

Attached are copies of [use this sentence if applicable and mention any attached documentation, like court documents and payment records] supporting my position. Please reinvestigate [this or these] matter[s] and [correct or delete] the disputed item[s] as soon as possible.

Sincerely, 
Your name

Attachments: [Mention what you are attaching.]

The credit bureaus are obligated to respond to your request within 30 calendar days. They will either verify the item or delete it.

If they don’t respond within 30 days, you can follow another strategy: You can ask for a credit report on the date your letter is delivered and another one after 30 days. This way, you can prove that they didn’t respond accordingly and they should remove the negative entry off your credit report.

609 Letter Template for Disputing Negative Items

You can use the above template for any inaccurate negative inquiry on your credit report. However, many consumers used to send the “609 Letter” (due to the 609 section of the Fair Credit Reporting Act) to dispute items that are probably accurate.

Of course, it’s not guaranteed that they will delete your negative item. Sometimes it works, but not always. They may show you the appropriate documents.

Here’s a 609 Letter Template for disputing negative items:

[Your Name]

[Address]

[City, State, Zip Code]

[Date]

[Credit Reporting Bureau’s Name]

[Address]

Subject: Fair Credit Reporting Act, Section 609

Dear Credit Reporting Agency (Equifax. Experian, or  TransUnion),

I am exercising my right under the Fair Credit Reporting Act, Section 609, to dispute information regarding an item that is listed on my consumer credit report: [Name of Collection Agency, number of account  XXXXXXXXXX].

According to Section 609, I am entitled to see the information’s source, which is the original contract that contains my signature.

My identifying information is as follows:

Date of Birth: XX/XX/XXX
SSN: XXX–XX–XXXX

[In case you have a lawyer, mention that you have legal representation and provide that the contact information of the person]

As proof of my identity, I have included copies of my birth Social Security Card, W-2, passport, birth certificate, driver’s license,mobile phone bill, and, rental agreement. Also, I have attached my credit report’s copy with highlighted the account I am requesting to have verified.

In case you are unable to verify the account with the original contract, the information should be deleted from my credit report within 30 days.

Sincerely,

[Name/Signature]

You can find more specific templates on FTC’s website.

2^nd Step: Dispute the Negative Entry with Your Lender

If the credit bureaus respond to you stating that your negative entry is verified, you should send a letter to your lender asking for evidence of how this item is verified.

Remember that the point here is that lenders have to provide proof that you were indeed guilty of late payments or other negative inquiries. If they fail to do so, they have to contact the credit reporting bureaus on your behalf and request the negative items to be removed.

Now that the credit reporting agencies verified who reported the negative inquiry, you’ll have the information you need to send a dispute letter to your lender.

You can use a template like this (recommended by the FTC):

[Your Name]

[Address]

[City, State, Zip Code]

[Date]

[Lender’s Name]

[Address]

Dear Sir or Madam,

I am sending this letter to dispute the following information that your company provided to [mention the credit reporting company’s name you received your report including inaccurate information]. I have highlighted the items I dispute on the enclosed credit report’s copy I received.

This item [mention item(s) disputed by types of the item like credit account or judgment, etc. as well as your account number or another method for the information provider to locate your account] is inaccurate because [provide what is inaccurate and the reason why]. I am requesting that [name of company] have the item(s) removed [or request another specific change] to correct the information.

Attached are copies of [use mention all attached documents like court documents and payment records] supporting my position. Please reinvestigate [These or this] matter[s] and contact the national credit reporting agencies to which you reported this information to have them[correct or delete] the disputed item[s] as soon as possible.

Sincerely,

Your name

Attachments: [List what you are attaching.]

If you’re lucky enough, the creditor will agree to delete the item. They have to contact the credit reporting agencies to remove it as well!

How to Dispute a Bankruptcy from Your Credit Report

It’s not an easy task to remove a bankruptcy off your credit report, because it’s a public record. The truth is, a bankruptcy will hurt your credit score significantly, so it’s worth a try to try deleting it.

Thanks to the Consumer Financial Protection Bureau, almost none of your public records will appear on consumers’ credit reports. However, bankruptcy is the only public record still allowed.

Keep into account that creditors can still found your public records (through alternative credit reporting systems) if they want to and they may influence their decision to approve your request for credit.

Public records that they can still be found are:

• Judgments
• Foreclosures
• Repossessions
• Bankruptcy
• Tax Liens

The best procedure to try if you want to delete a bankruptcy off your credit report is (although no one can guarantee successful results):

1. Look carefully for any errors in your public record and credit report.
2. Dispute these errors with the credit reporting agencies mentioning the information and send a procedural letter request to ask how the bankruptcy was verified.
3. Probably, the credit bureau will describe to you how the bankruptcy was verified. You’ll now have the source that verified the bankruptcy.
4. Next, you want to get a letter from this source that proves that the bankruptcy was indeed verified. It’s better to send a self-addressed prepaid envelope because you make a request for a letter.
5. Depending on the source, you may get a letter that the bankruptcy was actually never verified.  Then, you can send this letter to the credit reporting agencies to request to delete the bankruptcy of your credit report.

The credit reporting bureaus don’t call bankruptcy courthouses to verify the case. This makes it possible to dispute the negative item thanks to FCRA rights at your disposal.

Also, on its official website, the Bankruptcy court states that they don’t report and don’t verify bankruptcies on the credit bureaus and they can’t change your credit report.

Even if you succeed, it can take up to 2-4 months. It’s better than waiting for the bankruptcy to naturally be deleted after 7-10 years though.

How long does a Bankruptcy Stay On My Credit Report?

A bankruptcy will fall off naturally after:

• 7 years for Chapter 13 because you’ve paid some of the debt
• 10 years for Chapter 7 because you didn’t pay any of the debt

How to Create a Suitable Debt Repayment Plan

Do you want to pay off all your debts and repair your credit score? Then, it’s necessary to create a debt repayment plan and take action!

All good debt repayment plans consist of the following steps:

1. Write down all your debts
2. Try to discuss and settle with your lenders
3. Decide which debt to pay off first
4. Create a budget
5. Look for ways to earn extra money if you have to
6. You can ask for professional help if you need it
7. Start paying off your debt

Obviously, payment history is the number 1 credit scoring factor. This way, it’s essential to repay your debt if you want to rebuild your credit score.

1. Write down All Your Debts

First, you should make a list that includes all your debts, interest rates, amount owned, and minimum payments.

For Example:

Debt	Interest Rate	Amount	Minimum Payment
Credit Card 1	13%	$3,000	$150
Student Loan	6%	$17,000	$170

This way, you’ll know exactly how much you owe and you can start discussing with your lenders.

2. Try to Discuss & Settle with Your Lenders

Before start paying off your debt, you should start trying to discuss and settle with your lenders.

They will probably offer you a more affordable plan, especially if it’s related to the credit card or you’re in default and one step before turning to collections.

Simply, call your lenders and be honest with them. Describe to them that you are trying hard to repay your debt and ask them if they can offer any kind of help.

They might offer better interest rates in exchange for quicker payments or reduce the amount owned if you offer them a lump sum. Further, they may even agree to reduce monthly minimum payments.

Creditors often prefer to receive a portion of the debt than nothing at all.

3. Decide which Debt to Pay off First

It’s highly recommended to focus on one loan at a time. Trying to pay off all debts at once is not in your favor.

Note that whatever debt you decide to pay off first; you’ll have to pay the minimum payments in all other loans/credit cards.

There are two common strategies here:

1. You start by paying off the loan with the highest interest rate. This way, you’ll get out of debt sooner and you’ll end up paying less money on taxes.
2. Start by paying off the smallest loan first. This method is used to gain psychological motivation to keep going after successfully paying off a debt

4. Create a Budget

With a few words, your monthly expenses should not exceed your monthly income. To make sure your monthly income is greater, you should create a budget and follow it.

You can start by planning a budget. You can do it manually, find a free online budget template, or use a free tool like Mint.com. It’s a tool that connects all your cards and payments.

Then, you can categorize the expenses and set a maximum amount you can spend each month.

Also, you can recognize where the majority of your income goes and try to save some money

Creating the budgeting template is not enough though. You need to make it a habit to check and review it every month.

5. Find Other Ways to Make Money

Obviously, finding a way to make some extra money each month will be a great aid on your quest to repay debt.

Depending on your lifestyle, you can start a side hustle like freelance writing online, find a part-time job, or use cash-back apps and programs.

6. Ask for Help

If you find this process overwhelming, you can always reach out to a nonprofit counselor and ask for help.

They often can negotiate the debt with your creditors on your behalf or help you create a budget.

Not all nonprofit agencies are free and not all of them are approved. You can find a list of approved credit counseling agencies on the Department of Justice’s website.

Further, you can find a guide by FTC about how to recognize and choose a legit credit counselor

7. Start Paying off Your Debt

Now, you have everything you need to start paying off your debt and finally repair your credit:

• A list with all your loans
• Prioritize which debt to pay off first
• A budget to help you save money

Why & How to Lower Your Credit Card Utilization Ration

The credit utilization ratio is another important factor that affects your credit score. The lower the score, the better it is.

Fortunately, it’s simple to understand how to fix it.

To calculate your credit utilization ratio, you can divide all your credit limits by your balances. Then, you multiply this number by 100.

 For instance, if you total credit limit is $20,000 and your balances add up to $4,000 your credit utilization ratio will be 20% because 4.000/2000= 0,2 & 0,2×100= 20%.

The best ways to lower your credit utilization ratio are:

1. Lower your expenses: If you’re making monthly payments and you don’t increase your balances, you’ll decrease your ratio.
2. Pay off your balances: Obviously, having lower balances helps directly your utilization ratio.
3. Ask your lender for a credit limit increase: Chances are they will accept it if your accounts are in good standing. It also depends on the type of account.
4. Don’t close old accounts: Closing an old account will increase your ratio (because it will decrease the credit limit. Also, the age of credit accounts is a factor for credit scoring, so it’s a good signal to show you’re a credit user for a longer period.
5. Opening a new line of credit will decrease your ratio because you’ll have a higher credit limit. However, it can be risky if you can’t be responsible and you’re not sure what you’re doing.

DIY Credit Repair Summary

By reading this DIY Credit Repair guide, you’ve already taken the first step to raise your credit score!

Make sure you totally understand what a credit score and a credit report are and how to get them for free. This way, you’ll know what the most important credit-scoring factors are and what you should do to repair your score.

Also, you should be able to read your credit reports and spot any errors that harm your score. Above you’ll find anything you need to learn how to dispute inaccurate or negative items off your credit reports!

Your credit utilization ratio is another important fact you should pay attention to because it’s not that hard to take advantage of it for a better credit score.

Of course, you can’t repair your score without a great repaying debt plan. Your next step should be to start carefully creating your plan and start paying your balances as soon as possible!

If you decide that repairing your credit is too much of a drain on your time, be sure to check out our recommended credit repair firms.

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