The majority of credit users are willing to fix their credit scores only when they need it. But credit repairing is not a process that can happen overnight. This way, it’s better to learn how to fix your credit before it’s too late!
To start repairing your credit score, you can follow the below-mentioned steps or check our free “DIY Credit Repair Guide” for more details and instructions.
How to fix your credit score in 10 simple steps:
- Get all your credit reports
- Review them for errors/negative inaccurate inquiries
- Dispute any errors you found
- Decide if you want to try removing accurate negative inquiries
- Increase your credit limits
- Pay off your balances
- Make full on-time payments
- Lower your Credit Utilization Ratio
- Don’t close old accounts
- Discuss with your creditors
Get All Your Credit Reports
There are many services and companies where you can get your credit reports from. However, it’s better to get them from (the authorized by government site) AnnualCreditReport.com
You have the right to ask for a credit report from each of the three credit reporting bureaus every 12 months.
If you want to learn how to fix your credit, it’s better to ask for all of them.
This is because the credit reports may differ from each other. Not every creditor reports to all three reporting agencies. But you don’t know which one of your reports will be checked by future creditors or employers, so it’s better to check all of them regularly.
Review Them for Errors & Negative Inaccurate Inquiries
If you’re serious about your credit score, you can’t belong to the group of people that ignore their credit report errors.
You should carefully check that all your personal & account details are correct. Inaccurate personal details can mess up your credit score.
Also, you should check you recognize all the payments, names, addresses, and payments’ dates. Note that some companies use third-party services that may show up on your credit reports, so you may don’t recognize all the names.
If you see many names or addresses you don’t recognize, make sure you’re not a victim of identity theft. You can achieve that by contacting the names/phones mentioned in your report.
However, you should remember the payment amounts. If you find any negative inquiries that you’re not responsible for such as incorrect late payments, you should dispute them.
Negative inquires like late payments are lowering your credit score, so it’s essential to remove them.
Dispute Any Errors You Found
Once you spot all the errors on your credit reports, it’s time to dispute them. You can do that by:
- Sending a letter to the credit reporting bureau that has reported the error
- Sending a letter to the creditor that reported the inaccurate inquiry
- visiting the relevant websites of the three credit reporting bureaus:
The recommending method is to send a letter to the credit bureau first. If they don’t remove them, continue by sending a letter to the creditor that reported the error.
This is because you have more rights by sending a letter. If you use the online platform, they can skip some steps that do not work in your favor.
However, online disputing should work for negative inquiries that you’re not responsible for. If going online does not work you will still have to start sending letters, preferable by certified mail.
Decide if you want to try removing accurate negative inquiries
Have you ever heard about credit repair attorneys or companies? How can they remove accurate negative inquiries that hurt your credit score?
They follow a specific tactic that we also mention on our “DIY Credit Repair Guide”. It’s not guaranteed to work, but sometimes it does.
You’re not supposed to be able to remove accurate negative inquiries. However, you can try this tactic and see if it has any results.
With a few words, this strategy depends on:
- Sending a dispute letter to the corresponding credit bureau, asking to remove a specific negative inquiry and how they received it.
- If the response is negative, they may provide you the details of the creditor that reported the negative inquiry. Then, you can send a dispute letter to the creditor, asking how they verified this inquiry.
They’re obligated to respond within 30 days, providing evidence that your negative inquiry is valid.
Here’s the trick: Many agencies like collection companies don’t bother to search and provide evidence, so they prefer to save time and ignore the request. This way, they have to contact the credit reporting bureaus to ask them to remove the negative mark off your credit report.
Note that bigger institutions such as banks are more likely to provide evidence. However, you can try this method if you believe it’s worth it to remove these negative marks.
Increase your credit limits
Your credit utilization ratio is among the most important credit-scoring factors. It’s a number that indicates how much of your available credit you’re using.
For instance, if your credit limit is $3,000 and you’re using $300, your credit utilization ratio would be 10%.
To achieve a high credit score using credit cards, you should aim for a ratio below 30%. Obviously, if you owe the same amount but your credit limit increases, your credit utilization ratio will drop.
You can increase your credit limit simply by applying for new credit or contacting your credit card issuer and ask for a credit limit increase. If you’re in good standing and you’re using your credit card for quite some time, they usually accept your request.
This is not the case if you owe too much money though.
Pay off your balances
It’s hard to think of a high credit score with unpaid balances. If you’re struggling to pay your balances, you should start to create a budget and a plan as soon as possible.
It’s better to focus on paying an account at a time, preferably the one with the highest interest rate.
Otherwise, you can start by paying the accounts with lower balances, so you feel like you’re making progress and keep going.
The sure thing is, you should spend some time to create your plan and decide what the more beneficial route to follow is.
Make full on-time payments
Making full on-time payments is the most positive signal you can send on your credit reports. Of course, they help drastically to rebuild your credit score.
Your payment history is the most important factor that determines your credit score (40% of your FICO score)
If you don’t have a credit score yet or if you want to rebuild your credit score, you can take advantage of making full on-time payments by using secured term loans (also known as credit builder loans) or a secured credit card.
The majority of secured credit cards have low requirements to qualify because you need to make a security deposit. This way, you can qualify for one even if your credit score is poor.
In general, you should use your credit card for making small purchases, paying bills (like phone bills), or making purchase you’re sure you can afford to pay back on time.
Note that paying only the minimum required amount doesn’t work in your favor. You should try to fully pay your balances on time.
Lower your Credit Utilization Ratio
As mentioned above, maintaining a low credit utilization ratio makes you trustworthy. You can lower your ratio by:
- Increasing your credit limit
- Paying your debt
To increase your credit limit, the simplest way is to ask your credit card issuer for a credit limit increase.
Alternatively, you can consider applying for a new credit card. However, this comes with some consequences too. For example, a hard credit inquiry will appear on your credit report, deducting temporarily a few points off your credit score.
Also, you should make sure you’re responsible enough and don’t use this card to sink more into debt.
You should weigh what is more beneficial for you and make your choice. If you decide to open a new credit card, try to avoid account with high annual fees.
Don’t close old accounts
The longer you’re using credit the better it is for your credit score. As a result, closing old credit accounts is a bad signal for your score.
If you have many different old accounts that come with high fees or interest rates, you can consider closing some of them.
However, avoid closing it if you have only one old account.
Discuss Options with your creditors
If you’re actively trying to come up with a plan to pay off your outstanding balances, you can reach out to your creditors to ask for help.
Be honest with them and explain that you’re trying to pay off your balances.
Often, they prefer to help you pay your debt rather than lose their money. Your creditors may offer you better rates and help you create a payment plan you can actually follow.
How to Fix Your Credit in 10 Easy Steps – Summary
Learning how to fix your credit is not that hard after all.
Repairing your credit score is a process that you should initiate before it’s too late. As you understand, it can take time to successfully repair your credit score. The sooner you start the better.
Start by reviewing your credit reports and dispute any errors you spot. Then, you can continue by creating a plan to pay back your debt.
Making full on-time payments, keeping your old accounts open, and lowering your credit utilization ratio are three factors that will drastically raise your credit score.
Last but not least, don’t hesitate to reach out to your creditors and kindly ask for better terms to be able to pay them back.
How to Fix Your Credit Score FAQs
It greatly depends on your standing. However, you should wait at least 6-12 months to see a significant credit score increase if you are maintaining strong credit habits.
Yes, it’s possible but it will not be easy or fast. Note that the older your negative inquiries are the less powerful they are.
A public record like bankruptcy can appear 7-10 years on your credit reports. It doesn’t affect your score that much if it’s too old though.
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