The Insider’s Guide to Credit Repair
If you’re looking to improve your credit score, don’t worry – you’re not alone. According to Experian, the average credit score in the US is 695, which is considered a good score. But that doesn’t mean everyone is sitting pretty with a good credit score. A large number of Americans have bad credit scores they’d like to improve.
However, improving your credit isn’t always easy. Knowing what to do, where to start, and how to go about the process can be overwhelming and intimidating. With that in mind, we’ve put together this insider’s guide to credit repair so you can get on the right track to improving your credit.
Identify and Dispute Errors
The first step towards credit repair is to take a close look at your credit reports. To get a more complete picture, get reports from all three major credit bureaus: Experian, Equifax, and TransUnion. Carefully review each report for any errors or inaccuracies. Common mistakes include misattributed accounts, incorrect balances, inaccurate personal information, and incorrect late payments.
If you spot any mistakes, dispute them with the credit bureau immediately. They are legally required to investigate disputed claims within 30 to 45 days and you will receive a written notice of resolution.
Pay Your Bills on Time
One of the fastest and easiest ways to improve your credit score is to pay your bills on time. Late payments can have a huge effect on your credit score, so set up reminders or auto-payments to stay on top of your bills. Even if you can’t pay the full amount due, pay the minimum on time to help keep your score from dropping.
Limit Credit Usage
How you use your credit cards can also have an impact on your credit score. Aim to keep your credit utilization ratio (the ratio of your total credit balances to your total available credit) below 30%. This means that you should try to use no more than 30% of your total credit limit.
If you have a lot of open credit cards, consider consolidating them and closing any unnecessary cards. Not only will this make it easier to keep track of your spending, it will also reduce your available credit and lower your credit utilization ratio.
Keep Old Accounts Open
In addition to reducing your credit utilization ratio, it’s important to keep your oldest accounts open. The age of your credit accounts affects your credit score, so if you close an older account, it will drag down your credit score.
Instead of closing old accounts, use them occasionally to keep them active. For example, charge a small amount to your oldest credit card every few months and make sure you pay the balance when the bill arrives.
Get Help if You Need It
Credit repair can feel overwhelming, and if you’re feeling overwhelmed, it may be time to get some help. There are lots of resources available to those looking to improve their credit scores. You can speak with a credit counselor at a nonprofit credit counseling agency, or hire a credit repair service to help you fix errors and work on improving your credit score.
By following these tips and taking the right steps, you can make a significant improvement to your credit score and get back on track to a healthier financial future.
