Wouldn’t it be nice if there was a magic wand you could wave to repair your credit? Unfortunately, we aren’t here to tell you that we found that magic wand. Instead, we will tell you that it is possible to fix your credit, but it will take some hard work.
There is no magic timeline we can tell you that it will happen in either. You have to be diligent and consistent. Your hard work will pay off. Some people will fix their credit in a matter of months. Others may take years to get their score where they want it. It’s all a matter of how bad you want it.
Once you are ready, take the following steps.
Get Current on your Bills
First things first, you have to be current on your bills. If you are behind, use this time to catch up. Pull your credit report from the three bureaus without cost here. Then look at any payments that are currently late and bring those accounts current.
This may take some time. You may not have the money to bring every account current right away. That’s okay. Take your time, but again, be consistent. Keep working until every account reports current. Then keeping making those payments on time – don’t let another account lapse.
Pay Your Balances Down or Off
Next, it’s time to pay those credit card balances down. Actually, paying them off is ideal, but take baby steps. Your utilization rate is the amount of outstanding debt compared to your available balances. The more debt you have, the higher your rate. The higher your rate, the lower your credit score.
Again, this won’t happen overnight either. If you have high balances, just pick one and start paying it down. Once you have it at less than 30% of its available balance, work on the next account. Keep doing this until all accounts are within 30% of their available balance. Of course, if you have the capability, you can pay the balances off and be in even better shape!
Dispute any Discrepancies on Your Credit
Don’t take everything you see on your credit report as the truth. Only you know what is accurate and what isn’t accurate. If there are items on your report that are not accurate, it’s your responsibility to get them fixed. No one will do this for you. If you don’t dispute the account, the negative information could affect your credit for many years to come.
You’ll have to write to the reporting credit bureau yourself. In your letter be as specific as possible about the account in question and the reason you don’t think it’s accurate. If you have any supporting documentation include that as well.
Once the credit bureau receives your request, they have 30 days to rectify the situation. They have to contact the account holder and find out if your dispute is valid. If the creditor does not respond within 30 days, the item must be removed from your report. If they do respond and they agree with you, it will also be removed.
Following up with the bureau will help you make sure the process is handled correctly.
Get a Secured Credit Card
If you aren’t left with any trade lines, you may want to open a secured credit card. This almost foolproof method will help your score increase with regular use. Because you can only spend what you put down as a deposit on the card, you aren’t at risk for default or collection actions.
Of course, it’s to your benefit to pay the monthly bill on time and in full. This will help prove your financial responsibility moving forward. As your score increases, you may be able to apply for a regular credit card as well. This gives you a few trade lines with positive histories, if you are consistent, moving forward.
Each of these steps takes time. How much time depends on you and the companies you have to deal with along the way. Your credit score will not change overnight, but staying consistent will help it change as fast as possible. Once you do improve your score, make sure you keep up those good habits so that you don’t have to go through the process again.