4 DIY Credit Repair Tips
58 million people have poor credit scores—lower than 601. But most of these people aren’t bad with money or inherently bad with credit. Instead, they fall on tough times, go through divorces or bad breakups, or whether nasty economic turns.
So what do you do when you want to get your score back up? One method you can try is DIY credit repair.
Here’s what you need to know to make it work best.
We can help you fix your credit. Give us a call for a FREE credit report consultation.
1. Understand Credit Score Factors
Your credit score matters because it decides how much credit your eligible for, the interest rate on a loan, and whether or not you can even get a mortgage.
With a poor score, it can cost you thousands of dollars in unnecessary interest you wouldn’t have to pay just by boosting your credit score. But before you can start to repair your score, you need to understand the factors that go into it in the first place.
Your credit score is a mix of the following five factors. We’ll go into each a bit more to help you understand them.
Payment History
Payment history is the biggest factor in your credit score, carrying 35% of your score’s weight.
And it’s no wonder, too. When banks and creditors lend money, they want to know the person receiving the funds will pay them back on time.
So missing payments is a really bad thing. In fact, recent changes to the way credit scores are calculated punish consistently missed payments more harshly than it used to.
Credit Utilization
Credit utilization affects 30% of your score. Generally, if you’re maxing out a lot of cards, it doesn’t show responsible fiscal management. So if every single card is maxed out and you’re applying for a new line of credit, creditors will look at that suspiciously.
The rule of thumb is to keep your credit utilization below 30%, ideally for each line of credit. So let’s say you have three credit cards with a limit of $1000 each. Two of them don’t have a balance, but the third is maxed out. This will more negatively affect your score than if you had a balance of $333.33 on each card.
Credit History Length
Your credit history length is worth about 15% of your score. Creditors like to see that you can responsibly handle credit for long periods of time.
Your credit history is more of an average number. So if you have one card open that you’ve had for four years but three new cards you got within the past few months, this will show a shorter credit history.
So if you want to repair your credit, avoid opening up new cards since it will negatively impact the length of your credit history.
Credit Mix
Credit mix is about how many different types of credit lines you have, such as mortgages, car loans, student loans, or credit cards. It accounts for 10% of your credit score.
Creditors want to know you can handle different types of credit responsibly, not just one particular type.
New Credit
New credit factors in for 10% of your credit score. Creditors look at things like new lines of credit or frequent hard inquiries. This can show that you’re on the hunt for new credit and raise red flags.
2. Look for Inaccuracies on Your Statement
Once you understand how credit scores work, it’s time to start working to repair your credit. The first thing you need to do is look at your credit report and make sure everything is true.
There are three different credit bureaus—Experion, Fico, and TransUnion. You get a free credit report every year, so make sure to do so.
Once you have your report from each bureau, look for inconsistencies in the report. Make sure any inquiry or line of credit is a real thing. If you spot things that aren’t true, report it to the bureau the report came from.
Mistakes do happen, but they can have real harm on your credit score. That’s why you need to be vigilant. You may find it useful to hire a credit repair agency who can dispute these reports on your behalf. Credit bureaus can be hard to handle.
3. Start Patient, Steady, Consistent Work
Once you’ve made sure your credit report is accurate, you need to fix your score. Unfortunately, the only way you can do this is with ongoing diligence and hard work.
First, make sure you’re paying all your bills on time. Since payment history is the biggest factor in your score, this is the first thing you need to work on.
Second, work on paying down debt. You can choose to do this each debt at a time, or make a plan to get each card below 30%.
And finally, avoid applying for any new credit until you get your score back up.
4. Talk to an Expert
Sometimes DIY doesn’t work, and you need a professional in your corner to help.
They can help you with things like checking your credit report to make sure all the information is right. They can also negotiate with creditors on your behalf and handle issues that can be hard to resolve on your own.
Talking to an expert can make it easier to repair your credit score. When you’re looking for help, make sure you avoid common credit repair scams that will leave you more hurt and broke than when you started.
Try DIY Credit Repair to Boost Your Score
When you want to fix your credit, you can do so with DIY credit repair.
The first step is understanding the factors that go into your credit score. The second step is hard work and patience. If you pay down your debts, regularly pay your bills on time, and keep the same line of credit open for several years, you’ll see your score go up.
If you want professionals on your side to help you repair your credit, get a free consultation today.
