how does credit repair work? 10 Easy Steps to Repair Your Credit

If you are here, it’s probably because you’re wondering how does credit repair work? Having a good credit score qualifies one for low-interest rates and very good terms. The importance of having a good credit score comes into play when you want to borrow money for personal use such as car loan, home loan, or when you want to lease a facility, buy an inventory, etc. to start a new business or expand your business.

A great challenge is that people think about credit score when there is a need; it is like building your professional contacts or network. It is important to know that if you do not have a good credit score, it is very difficult to fix overnight.

This is the reason why it is important for you to start repairing your credit today – before your need for it may arise.


Free Credit Score Estimator Tool

It is compulsory or necessary for the credit bureaus — Equifax,  TransUnion,  Experian.

If you have opened an account by simply signing up, you will be able to see your credit scores and view any information that is on the reports. Generally, the details of the different reports are usually the same, but not always the case. But for some reasons, credit reports are scarcely exact.

How does credit repair work (part 1)

2. Dispute negative marks

In time past, if you want to contest or dispute errors, one has to submit written letters to the credit bureau. These days, services like such as Credit Karma {I am not advocating for them, and I am referencing them because I have used their services) allow you to dispute errors online.

Ensure that you get best out of your dispute efforts. There are factors that may impact your credit score heavily than others, therefore, be attentive to those factors before any other thing.

Begin with those marks such as collection accounts and judgments that will degrade your credit score. It is not unusual to have for one or two collection account reflect on your report. There was a time I had two from my health care providers when I had a heart attack; my insurance company insisted that it has made payment while my health care provider insisted on the contrary, and a collection agency had to take up the accounts. Finally, I paid the health care providers and later dispute the payment with the insurance company, but both collections appeared on my credit report at the end.

These problems were easy to solve. I clicked on the “Dispute” button, selected “The creditor agreed to remove my liability on this account,” and the dispute was resolved within a week and the detail was erased from my credit report.

Also, errors can be disputed through the different credit bureau. If that is what you prefer, go here for Equifax, here for TransUnion,  and here for Experian.

Take note that some disputes may take longer time than others to be resolved. That is not a problem, once a dispute has been initiated by you, you are through. It is required of the bureau to investigate the dispute and report the resolution

Spend as much time possible to remove derogatory marks because they have a high impact on your overall score.

How does credit repair work (part 2)

3. Dispute incorrect late-payment entries

Mistakes are bound to happen. A payment which was made by you may be reported as late payment by your mortgage lender even though it was paid on time. It is also possible for a credit card provider may enter a payment wrongly. Late payments can be disputed – be it active accounts or closed accounts in a similar way that derogatory marks are disputed.

Another factor that impacts your credit score heavily is your payment history, therefore, work hard to fix any error.

How does credit repair work (part 3)

4. Ask nicely

You may have tried to remove a late payment, negative comment or an account that has been marked “Paid as agreed (this may mean that you have been allowed to pay less than what you owed by the creditor). Does this mean that you should give up? No, ask nicely. The credit bureau can be instructed to remove any information from your credit report at any time. For instance, I had not made payments with a particular credit card for a while and did not know that I was charged my annual fee until it became late payment.

My credit report carried the late payment, I have to call the credit card company to tell them what has happened, and informed them that I have been a long-time customer and asked if the entry could be removed. They answered in the affirmative. They also agreed to forgo all future annual fees. (This proved the fact that you do not get if you do not ask). Call and ask nicely when every other means fails. Many a time, a simple polite request for help may be what we just need.

How does credit repair work (part 4)

5. Increase credit limits

Your credit utilization is another key factor that impacts your credit score heavily: The ratio of available credit to credit used have a huge impact. Generally, having a balance that is more than 50 percent of your available credit will impact your credit score negatively. Reaching your card limit will surely harm your score. A way to upgrade your ratio is to pay up your balances, and another way to upgrade your credit score is increasing your credit limit. Your ratio will immediately improve if you increase the limit of a card which you are owing $2,500 on from $5,000 to $7,000.

You can increase your credit card limit by calling and asking nicely. Most credit card companies are usually happy to increase your card limit if you have a payment history = because they won’t have a high balance. They make money through this way.

Ensure that you do not utilize the added available credit because if you do, you will return back to the credit ratio boat… and you will be lost in debt.

How does credit repair work (part 5)

How does credit repair work (tips)

6. Open another credit card account

Opening a new account is another way of increasing your credit card utilization ratio. Your available credit will instantly increase by that card limit inasmuch as you do not carry a balance on the card.

Try getting a card that is free of annual fee charges. A sure way to get it I through a bank which you bank with. Note that cards without annual charges to charge interest rates that are high, but if you do not carry a balance, the interest rate is insignificant. Another thing is that you have to be smart. The objective is not to have more access to more money, rather, improving your credit core I the objective. But if you think that opening a new account will make you increase your balance, do not open a new one.

How does credit repair work (part 6)

7. Pay off outstanding balances

I am aware that you need a high credit score to borrow money; borrowing the money may not be necessary if you have the money

Still: you can impact your credit score significantly by reducing the credit used percentage. Therefore, you have to go on a very tight budget to enable you to have free cash to pay off your balance. You can also sell something to have pay off your balance.

It may not be easy to pay down your balance as a short-term strategy to improve your credit score, but making it a long term plan will help. This will not only improve your credit score in the long run, but it will also make you not to pay unnecessary interest – money which you could save instead of giving it to money lenders.

How does credit repair work (part 7)

8. Pay off high-interest, “new” credit accounts first

The age of credit is important to your credit report. Similarly, interest rates are important to your bank account. If you are saving $100 a month towards paying off your balances (more than the necessary monthly payments), concentrate on clearing your high-interest accounts. You have to prioritize the payment of these rates by the account age. Yow will extend the average length of your credit by paying off new credit account first, and this will help in improving your score and at the and time avoid the payment of high interest.

So you have to transfer the money that you have not used on that payment to the account that is next on your list. The ““debt snowball”” is really effective.

How do credit repair work  (part 8)

9. Keep your “old” credit cards

Your credit history age has a fair but significant contribution to your credit score. For instance, let’s say you have been using a credit card for 11 years; you may reduce your average credit history impact your score negatively if you close the account.

If you intend to improve your credit score but it is necessary for you to close your credit card account, close your “newest” card account.

How do credit repair work  (part 9)

10. Pay your bill on time

Do everything possible that you can to pay your bills promptly as even a single late payment can affect your score negatively.

If it happens that you were not able to make all your payments promptly in a month, you have to be intelligent about the bills you will delay. Any late payment will surely be reported to the credit bureaus by your credit card provider or mortgage lender, but your cell and utility providers may not. Look into the “Account” section on your credit report to know the accounts that are listed, and if it is necessary for you to pay late, select an account that is not reflecting on your report.

After that, work very hard to ensure that you timely pay for everything in the future always. Your credit score will surely improve, and you will be relieved of stress.

And on the long run, your bank account will improve.

How do credit repair work  (part 10)

Free Credit Score Estimator Tool