DIY credit repair is a set of actions you may take on your own to raise your credit score and enjoy the advantages that come with it. If your credit score is less than ideal, you must carefully consider credit restoration because a bad credit history might make the future challenging. You may not be eligible for loans, credit cards, or other forms of credit if you have bad credit. Prior to hiring you, prospective employers could occasionally look over your credit history.
We’ll go over crucial strategies for repairing your personal credit below.
1. Obtain your Credit Reports and Score
Visit any authorized credit bureau to obtain a free copy of your credit report. These reports detail your credit history so you can discover the specific transactions that are lowering your credit score. These free reports can be spread out throughout the course of the year, but if you’re working on mending your credit, you should access them all at once to obtain a full picture of your position with each bureau. It also doesn’t hurt to get free access to your credit score from a reputable website or, if available, your credit card issuer.
Keep an eye out for similar-looking bogus websites. Sites that claim to be trustworthy should be avoided. Stick to the sites that have received government approval because fraudulent websites try to deceive users into disclosing sensitive personal information.
2. Examine your Credit Reports
Review each of your reports carefully and look for items that can damage your credit, like:
- Typos or errors in your personal information
- Late payments
- Maxed out accounts
- Unknown accounts (could be a sign of fraud or ID theft)
- Accounts you requested to close, but are still open
- Accounts that have gone to collections
Make sure to document each negative mark you find and which account or creditor it’s attached to. You’re going to need to address each negative mark against you.
3. Address Negative Marks
You should speak with your creditor—not the credit bureaus—if there are really bad items on your credit report.
There are two ways to get correct negative marks off of your credit report: either contacting your creditors or waiting for the marks to naturally disappear over time. An accurate negative mark may be removed, but your creditor is not required to do so.
For instance, you might ask your creditor to assist you in resolving past-due payments and accounts by establishing payment plans or coming up with another solution together. Your credit can improve if you take care of past-due bills and undesirable accounts.
Alternatively, if you are typically in excellent standing with your creditor and have a track record of making payments on time but made a late payment due to an unusual circumstance, you might be able to contact your creditor using a goodwill letter and request that they take it off your credit history as a courtesy.
4. Dispute false items to have them removed
You can contact the credit bureau that reported the false, unfavorable items on your credit report and dispute them.
You can register a credit dispute in a number of methods, including online, by phone, and by letter; the preferred method will vary per credit bureau. Include any information you’ve found to be untrue in your dispute with the bureau that submitted the bogus report, including any inaccurate personal information. Here are some instances of false, bad information and what you can do to contest it.
Unclosed accounts
You should get in touch with the lender to make sure the account is actually canceled if you see that one that you asked them to close is still open. If it is, you can contest that as a false statement.
Unknown accounts
If you are unaware of any accounts that are open in your name, it may be a symptom of fraud or identity theft. As soon as possible, get in touch with the company that manages the account, launch an investigation, and cooperate with them to have the account closed. As a best practice, preserve a record of your communications as they might be necessary for a probe into identity theft.
Write a brief and clear statement, maintain copies of your statements as proof, and file your dispute online, by mail, or by phone in order to dispute erroneous information on your credit report.
If the agency accepts your claim, the negative item should be removed, which, depending on your credit profile, may assist raise your credit score. You’ll need to work with the bureau to ask that the false reporting be taken down if the agency doesn’t delete the item.
5. Review their decision, respond if necessary
The bureaus have 30 to 45 days starting the day they receive your dispute statement to reply to you. The bureau gives the entity that made the initial claim your statement and any pertinent data during this time, and after that organization conducts an investigation and sends the agency its conclusions. The results of the investigation will be sent to you by the bureau.
When you obtain the outcome of your claim, carefully review it. Congratulations if the outcome favors you! The bureau will take care of deleting the unfavorable information from your report.
6. Avoid applying for many new lines of credit at once
If at all possible, refrain from applying for additional credit lines while your credit is being repaired. The credit reporting agencies classify each time you apply for credit as a “hard inquiry,” which affects both your report and score. Your credit score may be impacted if you apply for a new line of credit frequently in a short period of time (for instance, if you keep trying to get authorized for new credit cards).
People with high credit ratings are able to apply for credit a few times a year without it significantly harming their credit. Be cautious with any hard queries as you repair your credit.
7. Stick to good credit habits
Paying bills on time, keeping credit card balances low, and paying off debt are all examples of good credit habits.
No matter how your claim came out, maintaining solid credit habits will eventually produce a favorable outcome. To improve poor credit and preserve good credit, try to make these actions habits.
Pay bills on time
To avoid further damage to your credit, pay your invoices on time. Payments that are more than 30 days overdue may be reported to the credit reporting agencies. You will be protected from late fees but not interest if you make the minimum payments. If you haven’t already, you should strongly consider signing up for automatic bill payments.
Pay off debt
A big step on the right path is paying off debt. There are several strategies you might use to settle your debts:
Adjust your spending habits. Change your spending habits and budget if you haven’t already so that you can at least pay the minimum amount due. The more debt from loans and credit cards you can pay off, the better.
Think about debt consolidation. Debt consolidation entails taking out a single loan to settle all of your debt and then making one payment on that loan instead of making several installments at higher interest rates.
Speak with your lender. Your lender could be ready to work with you to come to an agreement and payment schedule that is more manageable if you’re having difficulties making your payments.
Keep your credit card balances low.
Maintaining a low credit card balance can directly and favorably affect your credit score. Your credit utilization, which makes up 20% of your VantageScore and 30% of your FICO score, is the ratio of your outstanding debt to your credit limits. Additionally, this means that you shouldn’t take on more debt than you can comfortably repay.
When repairing your credit, be persistent and patient. To see your credit score rise, continue to practice the sound credit practices mentioned above. You can begin establishing new credit to help raise your credit score with favorable tradelines and favorable habits once you have paid off your obligations and have a firm grasp on healthy credit habits.