The specific steps to credit repair depends on what's on your credit report. Before you can start repairing your credit, first you need to order your report and review it for negative information. When you order your credit report, you should also receive an explanation of the things that are negatively affecting your credit. That will give you an indea of what you need to fix to improve your credit.
Here are some of the most common credit report blemishes and some tips on how to fix them.
Any incorrect information that’s on your credit report
By far, the easiest thing to fix on your credit report is inaccurate information. Clerical errors could easily lead to errors on your credit report. Don’t overlook these errors because they could be hurting your credit. Submit a credit report dispute to have inaccurate information removed.
How to Order a Free Credit ReportHow to Dispute Credit Report Errors
Past due accounts including late payments, charge-offs, and collection accounts
Your payment history has the largest impact on your credit score. Late payments will hurt your credit score more than anything else. Get current on any accounts that are delinquent. If you have accounts that are 30- or 60-days late, make those payments to keep them from taking a toll on your credit.
Negotiate with creditors and debt collectors to remove charge-offs and collection accounts from your credit report. They don’t have to remove this information, but you may be able to talk them into doing it.
Tactics for Paying CollectionsHow to Repair a Charge-Off
High and over-the-limit balances
Your level of debt has the second largest impact on your credit score. Ideally, your credit card balances should be at or below 30% of your credit limit. That means you’ll only have a $300 balance on a credit card with a $1,000 limit. First, focus on bringing over-the-limit balances below your credit limit to save expensive fees. Then, work on bringing all your credit card balances down to a more credit-friendly level.
Get Out of the Credit Limit Fee TrapUnpaid judgments
Simply put, pay any outstanding judgments. They’ll keep hurting your credit either until you’ve paid it or it falls off after seven years, whichever comes first.
Student loan default
Student loan default isn’t always permanent. Talk with your lender to find out what you can do to bring your student loan out of default. Often, you will have to make several months of timely payments before your student loan will be considered current.
Bankruptcy, Foreclosure, Paid Tax Liens, Paid Judgments
With these types of entries, there isn’t anything to “repair.” Instead, you should focus on rebuilding your credit by adding positive payment history and demonstrating you can manage your credit.
If you can’t get approved for a credit card, apply for a secured credit card. Use the card to make small purchases and pay your bill in full every month.
How to Rebuild Bad CreditLearn How to Use Credit
