What Is Credit Restoration and How Does It Work?
Your credit score is more important than you may even realize. If you have problems with your credit, you’ll find it difficult or impossible to get a loan, but that’s not the only issue. You’ll likely run into many other problems like issues with renting an apartment, getting auto insurance, taking out a cell phone plan, or even being hired!
Luckily, if you’ve had issues with your credit in the past, all is not lost. One popular option for turning things around is credit restoration.
What is credit restoration? And how does credit restoration work? Keep reading to learn more!
Credit Restoration 101
First things first – what is credit restoration? It’s simply a set of strategies that you can implement to help raise your credit score. In general, it involves verifying the information on your credit report and disputing any inaccuracies. It also involves taking steps to negate derogatory information included in your reports, like late or missed payments and defaults.
It’s important to note that credit restoration is not the same as credit counseling or debt settlement. Credit restoration doesn’t involve negotiating with your creditors to pay down your debts. Rather, it’s focused on bringing up your credit score.
The 4 Most Effective Credit Restoration Strategies
Taking the right actions, at the right time, is the key to restoring your credit. Here are a few of the most effective strategies.
1. Removing Credit Report Errors
The number one thing to do is to make sure that your credit report is accurate. If there’s any fraudulent activity that shows up – like accounts you never opened – then this can obviously have a negative impact on your credit score.
You can check your own reports and work directly with the credit reporting agencies to resolve this. However, you may have more luck working with a company that provides professional credit restoration services.
These companies are well-versed in exactly what needs to happen to remove inaccurate information from your reports and may be able to get you better results. If nothing else, outsourcing this important task can save you a lot of time and effort.
Just be careful when you’re choosing the company you’ll work with. There are a lot of credit repair scams out there, so do your research and make sure the company you’re considering using is reputable.
2. Making On-Time Payments
Your credit score is meant to be an indication of how risky it is for a lender to give you money. Lenders want to know that you’re going to pay them back when you’re supposed to and that you’re not going to default on your loan.
This is one of the reasons why on-time payments play a major role in determining your credit score. Making late payments is a HUGE deal!
Although you can’t change the past, the one thing you can do is make sure that you always make at least the minimum payment before the due date from this moment forward. One easy way to do this is to set up automatic payments (just make sure you have enough money in the bank to cover them!).
Start making your payments on time right now and you’ll begin seeing your score inch up after a couple of months.
3. Lowering Your Credit Utilization
Another factor that impacts your credit score is your “credit utilization.” This is basically the amount you currently owe compared to how much total credit you have. A low ratio, meaning you have much more credit available than you’re using, is better for your score.
If accounts with outstanding balances are listed on your report that don’t belong to you, this will obviously increase your utilization ratio. This is one of the reasons why fixing your report is always a critical first step.
Beyond that, it’s a good idea to start paying down your balances as much as you can. Consider picking up a side gig or selling some stuff you no longer need and using that money to make some larger payments towards the debt you owe. The quicker you can bring this down, the faster your credit report will climb.
4. Ongoing Monitoring
When you’re working hard to raise your credit score, it’s important that you keep an eye on it. This will help you see what’s working and give you the chance to quickly make changes if your score starts going in the wrong direction.
It’s a good idea to sign up for credit alerts so you’re immediately aware when things happen that will impact your score. You may also consider identity protection monitoring, particularly if you’ve already had fraudulent information end up on your credit report.
At U.S. Allied Financial, we provide all of these services as well as a monthly credit score analysis that will help you see exactly what is and isn’t working so you can make positive changes as quickly as possible.
Need credit counseling? We can take care of that for you too!
Start Repairing Your Credit Today!
Credit restoration can completely change your life – and, the best part is, you don’t have to do it alone! Get in touch with us today to learn more about the services we offer and how they can help you turn your financial life back around.
Get started with your free credit consultation today!
