How to Fix Your Credit: 11 Easy Steps for a Good Credit Score (2024)

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In the United States, the average credit score is 714, but only some have a good credit score. Most lenders rely on FICO scores when assessing creditworthiness. FICO scores range from 300 to 850, with 850 being perfect.

A poor credit score falls below the 580 range. If you find yourself with a lower score, it can hinder your ability to obtain things you desire, such as buying a new car, renting an upscale apartment, or purchasing your dream home. It can also result in higher interest rates on loans.

Improving your credit takes time and effort; however, by taking steps to boost your credit score sooner rather than later, you can begin enjoying the benefits that come with it. For example, having a higher credit score may qualify you for lower mortgage or car loan rates. Here are eleven steps to improve your credit:

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How to Fix Your Credit in 11 Easy Steps

Step 1: Get Your Credit Reports

Repairing errors and omissions on your credit reports is crucial to improving your credit. It’s essential to regularly check your credit reports to ensure their accuracy and to detect any potential fraudulent activity.

How to get a free credit report

To initiate the process, you must obtain a credit report to identify the specific areas that require attention.

According to legal requirements, each of the three prominent credit bureaus must furnish you with one complimentary credit report annually upon request. If you space your requests accordingly, you can receive a free credit report every four months.

As a result of the COVID-19 pandemic, it’s presently possible to access free weekly credit reports until December 2023.

You can acquire yours by visiting the Annual Credit Report Request Service website, contacting them via phone at 1-877-322-8228, or sending in the Annual Credit Report Request Form through mail.

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

In your report, you’ll find a detailed record of your credit background, encompassing information about your credit cards, loans, and accounts referred to collection agencies and any legal proceedings such as foreclosures or bankruptcies.

Since you’re entitled to three complimentary reports annually, it’s improbable that you will require extra copies. However, additional reports can be obtained directly from the credit bureaus for a fee if necessary.

Step 2: Check Your Credit Reports for Errors

Every time you access one of your credit reports, it’s essential to examine it for any inaccuracies thoroughly. According to a recent study conducted by Consumer Reports in 2021, over thirty percent of their participants discovered at least one error on their credit reports.

These errors have the potential to be quite impactful and can hinder an individual’s ability to obtain credit with favorable terms or even secure credit altogether.

While effectively managing your credit can contribute towards achieving a higher credit score, resolving poor credit requires addressing the root cause of the problem.

During the process of reviewing your credit report for errors, make sure to pay close attention to the following details:

• Incorrect personal information (e.g., misspellings, wrong addresses)
• Missing accounts that should be listed on your report
• Delinquencies or derogatory marks
• Data management errors
• Inaccurate public records (e.g., bankruptcies, foreclosures)
• Accounts that don’t belong to you
• Accounts listed as “closed by grantor” (meaning the lender closed the account on you)
• Accounts that aren’t accurate (e.g., they say they’re open when they’re closed)
• Duplicate accounts
• Fraudulent activity
• Incorrect inquiries

Making sure that your credit is error-free is crucial because any mistakes can hurt your credit score and affect whether or not lenders will approve you for a loan.

If you come across an error on your credit report, it’s essential to check if the same error appears on the reports from the other major credit bureaus.

Taking action to dispute or address these errors has proven to improve people’s credit scores within a relatively short period. Instead of waiting for your credit to improve independently, actively managing and fixing errors can lead to better results.

Here’s a pro tip: It’s advisable to review your credit report at least twice a year in order to catch any new errors. Identifying and disputing these errors can significantly affect your overall ability to get approved by lenders and the state of your credit.

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Step 3: Dispute Credit Report Errors

Having inaccurate negative information on your credit report, even if it’s just a payment made on time but reported late, can potentially lower your credit score.

Note that errors in personal information, such as an incorrect name or address reported by a creditor, don’t impact your credit score directly but should still be rectified.

If you encounter any inaccuracies in your credit report that need to be corrected, you have the right to dispute them with the appropriate credit bureau.

You can choose from three methods to dispute errors in your Experian credit report: online, by mail, or by phone. The other significant bureaus, TransUnion and Equifax, also have their specific dispute processes in place.

Once a dispute is filed with Experian, they’ll contact the company responsible for providing the disputed information and request them to review their records. Any incorrect information will be corrected accordingly, while unverifiable data will either be deleted from or updated within your report.

Step 4: Bring Past-Due Accounts Current

In addition to notifying the credit bureaus about any errors on your credit report, prioritize settling overdue balances on your various accounts. Note that until a payment surpasses the 30-day mark, it doesn’t qualify as late, according to the credit bureaus.

Nevertheless, once a payment extends beyond 30 days past due, creditors and lenders can inform the credit bureaus about your account status.

This action can ultimately have a significant impact on both your credit score and overall creditworthiness for up to seven years.

As time elapses and an overdue payment remains unresolved, its negative consequences become increasingly detrimental to one’s credit profile.

Find yourself in a situation where you cannot prevent a late payment from being added to your credit report. There may still be options for removing such negative items after they have already been reported.

When do collection agencies get involved?

If you fail to settle an overdue balance on your account for more than 30 days, your creditor can hand over your account to a collection department or agency.

This allows them to pursue payment from you directly. When a collection agency takes over an account, it can negatively impact your credit score and will be reflected in your credit report.

Collection agencies specialize in recovering funds for unpaid credit card bills, personal loans, auto loans, and mortgages.

The entry regarding the collection should be removed from your credit report after seven years. If you find any inaccuracies in the information collection, you can dispute it just like any other type of error.

What is a charge-off?

Once your payments reach a point where they’re 180 days overdue, your account will be deemed as “charged off.”

This means you will no longer have the option to make regular minimum payments. Your creditor will treat the debt as a loss on their records, and additional late fees may be charged for each subsequent month.

The status of being charged off can have severe consequences for your creditworthiness. Your lender may decide to increase your interest rate to the penalty rate, typically the highest possible rate. Furthermore, your creditor may transfer the account to a collection agency.

Discussing payment options with your lender is essential if you cannot pay off the total amount owed. When an account reaches charge-off status, this derogatory mark remains on your credit report for seven years.

What is a pay-for-delete?

A pay-for-delete is a mutual agreement between a consumer and a collection agency to erase a collection account from the consumer’s credit report, on the condition that the consumer settles their full debt or an agreed-upon reduced amount.

To request the removal of a charged-off account from your credit report, you can send a pay-for-delete letter to your creditor. This letter proposes that you clear your past-due balance in exchange for eliminating the charged-off account from your credit history.

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Step 5: Set Up Autopay

Your FICO^® Score is greatly influenced by your payment history, which accounts for 35% of the score. To maintain a positive payment history, ensuring that all your accounts are up to date is crucial. One effective way to achieve this is by setting up autopay.

You can set up autopay directly with the lender or service provider or link it with your bank account.

By automatically making at least the minimum payments for credit cards and other accounts, you can avoid late fees and their negative impact on your credit score.

However, paying off the entire balance every month is advisable. It’s essential to remember that sufficient funds should be available in your account to cover all autopay transactions and prevent any overdrafts or insufficient funds situations from occurring.

Step 6: Maintain a Low Credit Utilization Rate

Your credit utilization rate is the proportion of your revolving credit that you utilize about your overall credit limits. Your credit score is influenced by this rate, accounting for up to 30% of it. It’s important to note that the lower your credit utilization rate, the better it is for your score.

To determine your utilization rate, divide the total balances on all your credit cards by the sum of all their respective limits. This calculation should be done individually for each card and again for all combined cards.

If the overall or single account utilization rate exceeds 30%, paying off some outstanding balances on your cards is advisable to improve your credit scores quickly. The most significant positive impact on scores can be seen when reducing the utilization rate below 10%.

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Step 7: Pay Off Debt

When faced with multiple outstanding balances, there are two primary strategies you can employ. The first option is to prioritize paying off the account with the highest interest rate.

For example, if you have a credit card with an APR of 14.5 percent and another with only 7 percent, it would be wise to focus on eliminating the debt from the former before addressing the latter.

Alternatively, you can tackle your debts by starting with the account with the lowest balance. Doing so prevents that balance from accruing any further interest charges.

You have a recently acquired credit card with a balance of just $400. In this case, it may be more advantageous to pay off this amount in full rather than allow it to accumulate additional interest.

By paying off one account in its entirety, you’ll also alleviate some mental burden as there will be one less account demanding your attention and causing worry.

Of course, it remains crucial for you to continue making at least minimum payments on your other accounts while focusing on reducing them systematically according to either strategy mentioned above.

Step 8: Avoid Applying for New Credit

When you apply for fresh credit, the lender examines your credit report. This is a hard inquiry and may temporarily decrease your credit score by a small margin. If obtaining new credit is necessary, like a loan for consolidating debts, it’s advisable only to apply once you have located loans you’re likely eligible for.

Experian CreditMatch™ pairs you with loans according to your credit score, enabling you to determine which loans offer the highest probability of approval quickly.

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Step 9: Improve Credit History by Leaving Old Accounts Open

Remember that the length of your credit history carries significance. Accounts that have been open longer and have a good payment track record are more beneficial for your credit score. When determining which accounts to keep open and which to close, bear this in mind.

Your overall credit age is determined by the average time your accounts have been open. The older your credit age, the more advantageous it is for your creditworthiness.

Here’s a professional tip: If you rarely use a particular credit card, but it has been open for quite some time, it would be wise not to close it. Older accounts show responsible payment behavior with creditors, enhancing how trustworthy you appear regarding creditworthiness.

Step 10: Apply for a Secured Credit Card

A secured credit card functions similarly to a regular credit card but with one notable distinction: it necessitates a security deposit.

To open the account, you must provide a refundable security deposit, which typically establishes your credit limit and can be as low as several hundred dollars. If you fail to pay your bill, the credit card issuer will utilize your deposit funds to cover it.

The presence of the security deposit mitigates the credit card company’s risk, thereby increasing your chances of obtaining a secured credit card even if you have poor credit.

To prevent exceeding your credit limit, using the card for minor purchases is advisable. Making timely and complete monthly payments can aid in improving your overall credit score.

Step 11: Get a Credit-Builder Loan

Credit-builder loans, as their name suggests, are specifically designed to help establish or restoring an individual’s credit score.

These loans typically differ from traditional ones, usually for amounts below $1,000, with repayment periods between six and 24 months.

While repaying the loan through fixed monthly installments, the borrowed funds are held in either a savings account or a certificate of deposit. Simultaneously, all three major consumer credit bureaus report your payment history, including both principal and interest.

By consistently making timely payments on your credit-builder loan, you showcase financial responsibility and potentially enhance your credit score. Upon completing repayment of the loan, you’ll receive access to the funds being held in either account.

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How to Fix Your Credit – Buyer’s Guide

What Is Credit Repair?

Credit repair encompasses several suggestions, such as reviewing credit reports, identifying inaccuracies, and initiating disputes with credit bureaus or lenders.

Addressing these disputes and ensuring they’re resolved can be time-consuming and demands considerable patience. For individuals seeking to improve their poor credit, some opt to enlist the services of a credit repair company to alleviate themselves from this responsibility.

Can I Pay Someone to Fix My Credit?

When faced with difficult circ*mstances, it’s always beneficial to have some help. One option is to enlist the services of a credit repair company to aid in challenging negative items that are negatively impacting your credit score and resolving other credit-related problems.

Remember that credit repair companies cannot magically fix your credit overnight or promise the complete removal of accurately reported items. We’ve compiled a list of trustworthy credit repair companies to assist you in your search.

CreditRepair.com – Best Credit Repair Company Overall

CreditRepair.com has been operating for a decade and has successfully removed 8.2 million items since its establishment. Its primary objective is to challenge any discrepancies found on customers’ credit reports with all three major credit bureaus.

To achieve this, the company requests creditors to validate any negative entries they have reported. It closely monitors clients’ credit status to assist them in achieving their financial goals.

CreditRepair.com offers three different packages for customers, along with a complimentary consultation session aimed at helping individuals find the package that best suits their specific needs.

The pricing for these packages ranges from $69.95 up to $119.95 per month, and there’s also an initial startup fee equivalent to each package’s monthly cost.

One notable advantage of CreditRepair.com’s packages is that each includes credit monitoring services – a feature not commonly offered by other credit repair companies.

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Lexington Law – Best Credit Repair Company for Transparency

With over 15 years of experience, Lexington Law has established itself as one of the most reputable credit repair companies. Its mission is to transform the credit repair industry by delivering ethical and practical solutions to needy consumers.

Through its range of service packages, Lexington Law provides clients with a clear path toward improving their credit and achieving their financial objectives.

To assist customers in enhancing their creditworthiness, Lexington Law focuses on four key areas: analyzing credit reports, disputing inaccurate information, escalating disputes when necessary, and monitoring credit scores.

Customers can avoid setup fees and access packages starting at $95.95 by choosing Lexington Law. In addition to this offer, veterans and active military personnel are eligible for a 50% discount on the first-work price.

Suppose the customer and their spouse sign up for service together. In that case, they’ll receive an exclusive one-time 50% discount for their spouse as part of a family or household discount provided by Lexington Law.

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Credit Saint – Best Simple Credit Repair Options

Credit Saint is well-established with a solid 17-year tenure and highly regarded standing in the field. They extend a complimentary consultation to prospective clients and handle all correspondence with credit bureaus if customers opt for any of their packages.

Clients can select from three packages, beginning at $79.99 monthly, along with an obligatory setup fee of at least $99.

Read: Credit Saint Review

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The Credit People – Most Aggressive Timeline

In contrast to certain rivals who provide unclear schedules emphasizing customer outcomes, The Credit People initiates their work promptly and assures that specific clients may observe results in as little as two months.

They furnish your credit scores and reports immediately upon registration, enabling you to comprehend your credit standing. This initial assessment serves as a benchmark for measuring progress over time.

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Sky Blue – Best for Budget Option

For over three decades, starting in 1989, Sky Blue has been offering credit repair services. Their credit repair process is similar to that of other companies in the industry. Once you’ve filled out the sign-up form, Sky Blue will carefully examine your credit report and identify any items that can be disputed.

In addition to this, they will provide you with personalized tips and advice to assist you in rebuilding your credit. Once identified as incorrect or disputable, Sky Blue will initiate disputes with all three major credit bureaus on your behalf.

If the bureaus deny these initial disputes, don’t worry, Sky Blue has a backup plan. They’ll automatically send repeat dispute letters to increase your chances of successfully improving your score.

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How to Fix Your Credit – Frequently Asked Questions

How Long Will It Take To Fix My Credit?

Typically, it can require a few months for an incorrect entry to be erased from your credit report after contesting it. Nonetheless, the duration necessary to rectify your credit will primarily rely on your unique credit past and your actions in the future.

How Long Do Credit Mistakes Last?

This will appear on your credit reports for seven years from when your account became delinquent and was never brought current. Late or missed payments: If you’re late on a payment by 30 days or more, that negative mark will remain on your credit reports for seven years.

Should I Also Consider a Credit Counseling Agency?

If you find yourself in a situation where debt and the negative impact of bad credit are causing difficulties, seeking assistance from a credit counseling agency can be beneficial. These agencies, typically operating on a nonprofit basis and offering affordable services, collaborate with you to handle your debts and maintain a monthly budget.

They engage in conversations about your overall financial circ*mstances to identify any personal challenges related to money management while exploring potential remedies.

The Bottom Line – How to Fix Your Credit

It requires time to fix your credit, but stay patient, and you’ll witness encouraging outcomes. Enroll in a complimentary credit monitoring service to keep track of your efforts in improving your credit score.

By doing so, you’ll receive immediate notifications when there are changes in your credit utilization or new activities on your credit report.

Vigilantly observing your credit status can prevent you from reverting to detrimental spending patterns that could undermine all the progress you have made.

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