How To Repair Your Credit Score

Your credit score. A 3-digit number, that most of us don’t understand and would love if we could totally just forget about it.

Well, you can if you plan on buying a car and house in cash.

But the odds are you aren’t quite there yet or you wouldn’t be reading this post. But I pray one day you will be.

The reality for most of us is that your credit score plays a critical role when it comes to lending. It’s basically your very own borrowing report card. And the difference between an A+ or C- can save you a lot of money when applying for a loan or mortgage.

Here’s a moment of truth

When I started college in 2006 credit cards were passed out as souvenirs along with a free t-shirt or cup. At the time I was not aware much of anything when it came to maintaining my financial health so I was getting cards and buying things WITHOUT a job. Isn’t it crazy they were giving kids credit cards without jobs. That should tell you A LOT.

So guess what? I ended up defaulting on credit cards and my credit was ruined before I even really knew what a credit score was.

While I would love to say “BUMP credit!” or “who needs credit?!”, in all actuality mostly all of us. Life is just simpler with it, and GOOD credit at that.

You need a credit card to reserve rental cars and hotel rooms unless you want a stupid crazy hold placed on your debit card.

It’s just a matter of convenience. Well at least for me.

So let me ask you a question. How important is your reputation when it comes to your credit?

Do you plan on buying a home or car in the future? Then it should be extremely important.

It’s easy to take it for granted when you don’t even think about it until you really need it.

So I’m going to help you improve your credit score. I’ll break it down for you:

  • Finding your credit score
  • What and How your credit score is calculated
  • Why you should care about your credit score
  • How you can improve your credit score

So here we go…

How to Repair your Credit Score

Have you ever found the perfect house or apartment to rent, only to hear part of the formalities was to do a credit check and your heart immediately sinks.

Yea, I’ve been there.

In this post, I aim to help you get a solid grasp of where you are at with your credit score and then start you on a path to improve it.

Finding Your Credit Score

Well, before you can repair it you have to know where to find it first.

Personally, I’m a huge fan of Credit Karma. I love being consistently notified of the changes that may occur on my credit report (fortunately, it’s usually always a good change) and the best part is it’s FREE. Although, they may try to upsell you on some other things.

Simply create an account and start tracking your scores.

Credit Karma is great but it only shows you 2 out of the 3 credit bureaus reports and scores. But that’s more than enough to give you an idea of what your credit score is looking like.

To get a full detailed credit report I would head on over to Annual Credit Report. If you didn’t know you are entitled to one free credit report every year. Unfortunately, they don’t include the scores.

But that’s ok. The better your credit report the better your score looks. So take a good nice look at your credit report.

If you don’t mind paying for your scores then myFICO is a great choice. So go ahead and try it and Get 20% off your 3 bureau credit reports at myFICO

If you are married I would suggest you and your spouse set up a meeting time to go over your credit reports and to make sure things are being reported correctly. Even comparing them to Credit Karma to see how they compare.

You may be wondering….

What and How’s Your Credit Score Calculated

Like I said before your credit score is simply a reflection or a picture of how you manage your financial debts.

Your credit score is tracked and logged by independent “credit bureaus.” The three you are familiar with or most likely have heard here are – Transunion, Equifax, and Experian. Banks report to these bureaus in which helps create your credit score.

As transactions occur (payments, payoffs, late fees) the credit bureaus track them.

The higher your score is the more likely you are to repay your loans according to the lender. Here’s a breakdown showing you what your score may typically be classified as:

  • Excellent: 800+
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: < 580

Your score is made of few different factors and they are each weighted differently to make up a total of 100% of your credit score:

  • Recent searches or Credit Inquiries (10%) – How often and recent you’ve applied for credit.
  • Types of credit (10%) – The types and “mix” of borrowing products you carry (credit cards, personal loan, mortgage, car loan)
  • Length of credit history (15%) – How long your accounts have been open
  • Debt (30%) – How much debt you currently have & how much is used of your available credit
  • Payment history (35%) – How well you make your monthly payments.

Now, there are factors that related to each one of these that can cause your score to run low and I’ll let you in on that in just a sec.

Before I do, let’s dive into…

Why you should care about your credit score

1) Your credit score can save you money

When you maintain good credit lenders are more likely to give you more money at a cheaper rate. The great thing about it is that banks are very competitive and when you have a good credit score you have more leverage because banks know that you can easily shop around for better rates.

I know because I have good credit and I totally negotiated my mortgage rate down to the lowest rate possible that I could reasonably get by using two banks. But that’s a discussion for another time.

2) Your credit score gives you more access

If you have to have a credit you should get the best credit cards, and having good credit scores does just that.

By no means is this saying that I’m telling you to go get a credit card to buy things with. It’s simply me saying that if you are going to use a credit card for things like hotels, flights, etc. then use a good one that you could have some sort of benefit from.

Some cards have some really awesome reward programs.

3) Your credit score can have you laid up somewhere NICE!

It’s not a coincidence that the nicer apartments and homes often require tenants with good credit scores. If I was a landlord I would want to have some indication that I would get paid on time every month.

Now to the fun stuff…

How you can Improve your credit score

You’re probably thinking “finally, that’s all I wanted to know.” Geesh my bad, I’m just trying to be informative 🙂

So now that you have a better understanding of your credit score here’s how to improve it.

Pay Down Credit Card Balances

This is the fastest and easiest way to increase your credit score.

Before my husband and I bought our house we paid everything down to $100 our credit scores increased by 100 points, no lie.

That is not to say yours will because it all depends on how much you are paying off and different things on your credit report.

But if you can get all of your accounts to less than 30% utilization I could almost guarantee you will see a nice size bump in your score.

Getting your utilization down to 10% will most definitely do some magic!

If you don’t have the money now to pay it down, then budget for it.

Make Payments On Time

I know things happen where you just can’t pay your bill on time, but whatever you do don’t let it be 30 or more days late. That’s when you’re borrower will report to the credit bureaus.

If you find yourself constantly late beyond the 30 day period you may have more of an income problem so check out this post:

Late payments and collections have a huge impact on your credit score. So just make sure you are paying on time and if you can’t try setting up an arrangement but PLEASE just don’t let it go into default.

Take Advantage of Credit Report Investigations

Did you know that you can make things on your credit report vanish, like poof gone!

Not that simple, but you know what I mean.

Credit report investigations are a way to do just that.

You can make the credit reporting bureaus investigate the items on your credit report. And they are required by law if you request it.

So take note of everything on your account that looks bad on your credit report.

You may not like the next part because it requires some effort, maybe a lot if you have a lot of things on your credit report.

You are going to write 3 separate letters to the different credit reporting bureaus. Well, I guess one letter addressed to each credit bureau.

Here’s what the letter should say:

Date

Your Name

Your Address

Your City, State, Zip Code

 

Complaint Department

Name of Credit Bureau

Address

City, State, Zip Code

 

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

The 3 places you are sending these letters to are:

  • Equifax P.O. Box 740256 Atlanta, GA 30374
  • Transunion Consumer Dispute Center P.O. Box 2000 Chester, PA 19016
  • Experian P.O. Box 4500 Allen, TX 75013

The bureaus will have 30 days to complete their investigation, so make sure you send them by certified mail so you’ve tracking and proof that you sent the letter.

After 30 days, you should hear back from the credit bureaus. If there was an error found then it should be corrected. If you don’t hear back, then the account should come off your credit report. Magic huh?!?

Keep in mind that just because an investigation led to a removal, that doesn’t mean it can’t be added back again in the future so always keep an eye on your credit report.

But!

If you are like me and can barely make 24 hours in a day work then I would recommend using a paid service such as Lexington Law.  I can only talk about my experience and it was great! In approximately two weeks I had things coming off my account.

It is a little pricey but it was well worth it. Unfortunately, it will set you back about $100 a month but that comes with everything (credit monitoring, lawyer, letters to creditors, inquiries, etc.) Well worth my time if you ask me and on top of that their experts. It only took about two months to see a tremendous impact on my score, so if you don’t have the time and have money to invest in your score go for it. Plus I’m hooking you up with a discount!

Maybe you’re not ready for all that just yet. Take advantage of their free credit summary and consultation.

 Collection Accounts

Yea almost everyone has them.

You get those disturbing collection calls, day after day, from early in the morning to late in the evening. To the point, you may be wondering if it’s even legal. Unfortunately, yes!

But guess what?

Did you know that after the first initial contact of a debt collector, they are required to send you a letter detailing your debt within 5 days of their first contact with you?

So make sure you are on the lookout. If 5 business days past let’s say a week and nothing has been received, then they have violated the FDCPA. But the thing is you have to catch them.

So jot down the day when a creditor first calls you and start the clock.

If you catch them, then you may receive an offer to pull the account from your credit report and possibly wiping out any debt you may owe. But I would recommend consulting a consumer attorney about the process.

Now, if you have old collections.

I would recommend settling.

Why?

Because often time you may not have the money to pay off the balance and the collector just wants some money.

So call them up and tell them what you can afford, usually they will take it or counter with a slightly higher offer. Be firm with them tell them what you can afford and DON’T BUDGE!

Once they agree to tell them you would like for them to update your account by either removing it (which some will not) or with a Paid in Full. Make sure you get it in writing or at least an email. Also, take down names and numbers of the representatives you speak with.

Statute of Limitations

Thank God for statute of limitations because my credit would be hor-ri-ble without it.

For most of us in the United States, we need to wait 7 years for negative information to come off of our credit report.  Credit inquiries come off in 2. 

So if you are going through your credit report and you have things from 10 years ago still being reported its time to take action and get that off.

The secret that most people don’t know is that most consumer debts have a statute of limitations of only 3-6 years. It depends on what state that you live in. The information can still remain on your credit report for the full 7 years, but the debt collector can no longer attempt to collect the debt.

Good Credit Score Means More Choices

Having a good credit score simply provides you with more choices in life. It can make all the difference in owning vs. renting. 

So please stay on top of your credit.

And if you have been a victim of identity theft, don’t give up. Unfortunately, those situations are some of the hardest to recover from. But you can do it.

If you have not been a victim of identity theft with all the security breaches and hacks going on PROTECT yourself and your family. And a great way to do that is to signup with IdentityForce.  So go ahead and Protect What Matters Most with IdentityForce

So let’s gooooooo…. You got this your credit score will be where you want it to be in no time!

If you enjoyed this post please share by clicking on the photo below or by using the Pinterest or FB button at the bottom of the screen. Thank you!

Please Share!

Ready to take control of your finances? Join the Free 5 Days to Where You Want to be Financially E-Course

Just 5 days to finally get a hold of your finances so you can control them and not the other way around.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

Add Comment

%d bloggers like this: