5 Steps You Need to Take to Repair Your Credit
This post has been sponsored by Lexington Law. All opinions are honestly conveyed and are mine alone.
Have you ever applied for a credit card and only qualified for one with an extremely high interest rate? Or applied for a loan to finance the purchase of a new car and been turned down? If so, there may be items showing up on your credit report that are dragging your score down. But don’t worry, there are steps that you can take to clean up your credit report and repair your credit score.
So what all goes into your credit score?
A credit score is a number ranging from 300-850. Creditors use this compilation number to evaluate the risk of extending credit to you. But your credit score isn’t just one number—you actually have three credit scores. There are three different credit bureaus: Transunion, Experian, and Equifax. These agencies receive information about you from your current creditors and assemble that information into a credit risk score. Some creditors send and receive information from only one credit bureau, some use all three. Each credit bureau only uses the information—both good and bad—that is supplied to it by the creditors that utilize that particular bureau.
Your credit score is decided by several factors, including:
- Number of accounts that you have open
- Type of accounts
- Level of debt, as compared to available credit
- Length of credit history
- Payment history
- Number of recent credit inquiries
It is important to regularly review your credit report to make sure that the information reporting on you is accurate and up-to-date. If old accounts are showing up or negative items have not been cleared, they may be damaging your score. It is also critical to review your credit to make sure that no fraudulent activity is taking place.
How do I fix my credit?
If you find that your credit is less than perfect, don’t worry. There are some steps that you can take to resolve credit disputes, fix your credit, and increase your score.
- Request a copy of your credit report. In order to know what you need to fix, you need to know what is showing up on your credit report. You can request a copy of your credit report by contacting each credit bureau individually, or you can use a credit repair service to get a free copy of your credit report and a free credit repair consultation.
- Start making on-time payments. If you have accounts that you are making late payments on, try to get those caught up. Remember, a payment is not actually reported late to the credit bureau unless it is 30 days (or more) late. It can be really hard to catch up when you are in a cycle of making late payments, but moving that timeline up so that the creditors are reporting on-time payments will really boost your credit score.
- Only apply for credit cards that you need. It may be tempting to apply for a store card to take advantage of a special discount or free gift. However, you should only apply for and open credit cards that you need. Having too many open accounts might actually be tempting you to use credit more often—causing you to spend more than you would otherwise.
- Pay off or settle any bad debts. Old collection accounts can be truly detrimental to your credit score. If you currently have any accounts that are in collections, see if you can negotiate a settlement amount with the creditor or collection company. While the creditor would ideally like to collect the entire amount, including late fees and interest, they may be willing to settle and consider your account paid in full for a lower amount. Trying to negotiate a payoff or settlement amount can be overwhelming on your own, so you may want to consider consulting a credit repair company to help walk you through the process.
- Get old or inaccurate items updated. Just because you paid off an old account or a collection account doesn’t mean that it was properly reported to the credit bureau. So, if you have any accounts still showing up as outstanding, get a letter from the creditor showing that the account has been paid in full and that you are requesting that the account be closed. Once you have this letter, you can send it in to the credit bureau to update.
How do I get started?
Even when you know the steps to take to help repair your credit, it may be that you need some help to navigate through the entire credit repair process. That is where Lexington Law credit repair service can help. Working with professionals who know exactly what to do and how to follow up will get your credit report cleared up quickly and accurately.
Related article: How Credit Score Affects Your Monthly Bills