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5 Steps You Need to Take to Repair Your Credit

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.

5 Steps You Need to Take to Repair Your Credit // Money Savvy Living #creditrepair


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

5 Steps You Need to Take to Repair Your Credit // Money Savvy Living #creditrepair

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.

  1. 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.
  2. 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.
  3. 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 oftencausing you to spend more than you would otherwise.
  4. 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.
  5. 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.

5 Steps You Need to Take to Repair Your Credit // Money Savvy Living #creditrepair

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

How Credit Score Affects Your Monthly Bills

How Credit Score Affects Your Monthly Bills

This post has been sponsored by CreditRepair.com.  All opinions are honestly conveyed and are mine alone.

You probably know that how you pay your monthly bills affects your credit score: on-time payments will increase your credit score, while late payments will cost you extra in fees and lower your credit score.  But did you realize that your credit score can also impact the amount that you have to pay for your monthly bills?

image: via CreditRepair.com

What is your credit score?

Your credit score is basically a numerical way for the credit bureaus to express your creditworthiness.  Credit scores range from around 300 to 850.  The higher your credit score, the better your credit.  A higher score tells potential lenders that you are a low risk consumer and will likely payback the credit that they extend to you.  A low score tells creditors that you are a higher risk borrower.  There are several factors that go into calculating your credit score:

  • Length of credit history
  • Payment history
  • Balance of accounts as compared to credit line
  • Amount of times you credit has been pulled within a certain time period
How does your credit score actually affect your monthly bills?

Your credit score will have an impact on the rates that you qualify for when obtaining financing.  So when you apply for a new credit card, auto loan, or a mortgage, creditors base the programs and rates that they offer to you based on your credit score.  If you have a high credit score, you are going to qualify for a lower rate, which will give you lower monthly payments.  If your credit score is low, creditors will give you a higher rate because creditors look at lending you money to you as more of a risk, and this will cause you to have higher monthly payments.

What can you do to improve your score?

If you have a credit score that is less than perfect, or don’t have much of a credit history—don’t worry, there are steps that you can take to help improve your score.

Determine why you need to raise your credit score. Is it for lack of a credit history or because you have a bad credit history?

Lack of credit history

If you lack a credit history, the best thing you can do to build credit is to actually open a credit card and use it to pay monthly bills.  Because you are trying to establish a credit history, expect that the credit card that you get approved for may have a small line of credit and a high interest rate.  But that’s ok.  You don’t have to carry a balance on it from month to month, you can pay it off each month to avoid interest, but every month that you use your credit card, it will report to the credit bureaus.  Make sure that you pay the credit card bill on-time each month, and that will also report to the credit bureau—this will build a solid credit history for you.  So if you are accustomed to using cash, realize that you will have to utilize credit in order to build a credit history.

Credit repair

If you need to clean up a less-than-perfect credit history, there are several steps that you can take:

Start paying your bills on-time.  If it is at all possible, get your bills caught up and current.  Sometimes, when you are making late payments, fees may be added in and your next month’s payment isn’t fully going toward that month; in fact, it may be keeping your payments in a consistent cycle of carrying forward an unpaid amount from each month.

Close any old accounts.  If you have an old credit card that you no longer use, make sure to close it—as long as it is in good standing and has a zero balance.  If you leave old accounts open, it could be a risk for potential identity theft.

Clean up your credit report.  Sometimes old collection accounts, liens, or other derogatory information show up on your credit report.  Even though creditors are supposed to report when items have been resolved, it doesn’t always happen.  So how do you do this?  Using services from a company such as CreditRepair.com can help you identify old or erroneous items showing on your credit report, work with you to resolve those issues, and contact the credit bureaus to make sure these items are removed or updated.  Getting these incorrect items off your current credit report can increase your score quite quickly.

image: via CreditRepair.com