Are you struggling with a bad credit score but don't want to spend thousands of dollars on a credit repair company? Don't worry, you can do it yourself! This guide will walk you through the exact DIY credit repair steps you need to take to get your credit score back on track.
While professional credit repair businesses and credit repair software can help you, there's nothing they're doing that you can't do on your own. In addition, DIY credit repair can be cost-efficient and grant you control over your financial future.
We'll cover everything from pulling your credit reports to disputing errors, paying bills on time, and reducing your credit card balances.
Later, you'll also be able to start your credit repair business if you want to help others and change lives.
- Overview of the DIY Credit Repair Process
- The Exact DIY Credit Repair Steps To Follow
- 1 – Get copies of your credit report from the credit bureaus
- 2 – Check Your Credit Reports
- 3 – Make a List of Your Debts
- 4 – Address accurate negative marks
- 5 – Dispute Incorrect Information
- 6 – Follow Up With Credit Bureaus
- 7 – Automate the Dispute Process
- 8 – Reduce Credit Usage for Better Credit Repair
- 9 – Request a higher credit line
- 10 – Report Your Rental Payments
- 11 – Keep Old Accounts Opened
- 12 – Fix Late Payments And Stay Up-To-Date
- 13 – Pay Debt and Bills on Time
- 14 – Use a Credit Builder Account
- 15 – Monitor Your Credit Score
- 16 – Quick Tips For Improving Your Own Credit Score
- 17 – Reduce Credit Card Balances
- 18 – Avoid credit repair scams
- DIY Credit Repair FAQ
- Conclusion
Overview of the DIY Credit Repair Process
The credit repair process consists of these main steps:
- Request a copy of your credit report and analyze it for errors.
- Create a dispute letter to send to the credit bureaus.
- Send your dispute letter and follow up.
- Monitor your credit report and score for changes.
- Establish good credit habits to maintain a higher score in the future.
Let's review each step in more detail:
The Exact DIY Credit Repair Steps To Follow
1 – Get copies of your credit report from the credit bureaus
The first step in DIY credit repair is to pull your credit reports from all three credit bureaus – TransUnion, Equifax, and Experian. You can get a free credit report each year from AnnualCreditReport.com.
Make sure to get a free credit report from each bureau since they may have different information.
Credit Scores Range
Credit scores are essential in determining your creditworthiness, ranging from 300 to 850. A credit score in the high 600s or above is considered good and may increase your chances of being approved for loans and credit at favorable rates.
- 300-579: Poor.
- 580-669: Fair.
- 670-739: Good.
- 740-799: Very good.
- 800-850: Excellent.
Source: Equifax
However, if you have a bad credit score, you should improve it, as this can help you qualify for better credit products with more favorable terms.
Remember that a higher credit score could help you get lower interest rates on mortgages, car loans, and credit cards, saving you thousands of dollars in the long run.
2 – Check Your Credit Reports
Reviewing all three reports is important because the information each bureau has in your profile may sometimes be different. Discrepancies can lead to errors that could negatively impact your credit score.
What to look for when reviewing your credit reports
When reviewing your credit reports, you want to look for any inaccuracies or errors in your personal information, such as your name, address, and social security number.
It would help if you verify that you have accurate reporting for all your credit accounts and ensure that no fraudulent accounts or inquiries exist.
Additionally, look out for any late payments or negative marks on your credit report and take note of the accounts with the highest balances and interest rates.
This information will help you identify areas for improvement and develop a plan for repairing your credit.
3 – Make a List of Your Debts
To make a list of your debts, you'll want to gather as much information about each account as possible, including the following:
- account number
- credit limit
- loan amount
- monthly payment
- interest rate
With this information in hand, you can verify that all the reported accounts on your credit history are accurate and up to date. Double-check all the details for each account and note any discrepancies or errors you need to address.
Once you have a complete list of your debts, you can begin prioritizing which ones to tackle first based on interest rates, payment amounts, and other factors that impact your financial health.
4 – Address accurate negative marks
When reviewing your credit report, it's essential to look for any accurate negative marks.
These negative marks can negatively impact your credit score and make it difficult to obtain credit in the future. If you find any accurate negative items in your credit reports, you should address them as soon as possible.
It may involve paying off outstanding debts or setting up a payment plan with the creditor. While it may take some time and effort to address negative marks, doing so can help improve your credit score and overall financial health.
5 – Dispute Incorrect Information
After reviewing your credit reports, you might find some discrepancies or errors. These errors can range from incorrect personal information to false claims of missed payments.
Errors in your credit report can negatively impact your credit score, and you should dispute these incorrect items. Under the Fair Credit Reporting Act, you are legally entitled to dispute any erroneous information in your credit report.
You have two options to dispute any incorrect information on your credit report: file a complaint with the credit reporting agency or get in touch with the creditor who initially reported it.
The process of fixing poor credit is simple, but it does take time.
Option 1: You can contact the creditor. If you're seeking to contest an error on your credit report, the Consumer Financial Protection Bureau (CFPB) gives a sample dispute letter that could help.
Option 2 (Recommended): Submitting a dispute with the credit bureaus is easy, thanks to their convenient online portals. The process is simple; follow the instructions provided by the specific credit reporting agency. Make sure you keep copies of all correspondence and send any documents via certified mail.
6 – Follow Up With Credit Bureaus
After you file a dispute, the credit bureau or creditor has 30-45 days to investigate your claim. During this time, it's essential to follow up to ensure the removal of the incorrect item from your credit report.
If you are still waiting to hear back within 30-45 days, you can file another dispute or escalate the issue.
7 – Automate the Dispute Process
To dispute multiple items at once, consider automating the process. Indeed, you will save time and effort while ensuring your disputes are accurate.
Several credit repair companies offer this service for a fee. However, you can also automate the process by using a dispute letter template and mailing it to each credit bureau or creditor.
If you want to learn how to fix your credit score, start a credit repair business and help people change lives by improving their credit scores, I recommend you use Credit Repair Cloud.
On top of their credit repair software to automate the process, they can teach you how to become a credit repair agent and start your credit repair business.
You can join the Credit Hero Challenge, a 14-day training that will teach you everything you need to know about credit repair.
8 – Reduce Credit Usage for Better Credit Repair
While you work on improving your credit score, it's best to minimize your credit use.
Reason 1: Credit Utilization Ratio
Your credit utilization ratio makes up a significant portion of your credit score, so keeping your credit card balances low can help increase your credit score.
Avoid using credit cards to make new purchases and use cash or a debit card instead. Only use credit when necessary, and when you do, keep your balances as low as possible.
As a rule of thumb, try to keep your balances below 30% of your credit limit. This will show creditors that you are financially responsible and can help improve your credit score.
Reason 2: Hard Inquiries
It's important to be mindful before applying for new credit because every time you apply for a loan or a credit card, the lender will request a copy of your credit report. This is a hard inquiry, which can harm your credit score.
Inquiries made when you apply for credit typically remain on your report for up to two years, though their influence on your score generally dissipates after one year.
Indeed, recent hard inquiries on your credit report tell lenders that you have been actively seeking new credit, which could be a red flag for lenders.
To minimize the number of hard inquiries on your credit report, only apply for credit when needed and try to space out your applications.
Applying for several credit cards or loans in a short period can make it look like you're in financial trouble, which can be a red flag for lenders.
It's important to note that soft inquiries do not affect your credit score. They happen when you check your credit scores or receive a promotional credit card offer. Therefore, you can check your credit report as often as you want without worrying about damaging your score.
9 – Request a higher credit line
One way to improve your credit score is to increase your credit limits. If you're using a large portion of your available credit, this may be negatively impacting your credit utilization ratio, which can hurt your credit score.
By requesting a higher credit limit, you can increase your available credit, lower your credit utilization, and help boost your credit score.
To increase your chances of approval, consider the following:
- Making on-time payments,
- Having a good credit history,
- Asking for a reasonable increase that is within your means to pay back.
10 – Report Your Rental Payments
If you're a renter, you can report your rental payments to the credit bureaus to help improve your credit score. While not all credit bureaus consider rentals in their scoring models, some do, and reporting your rental payments can help to increase your credit score.
Several services can help you report your rental payments to the credit bureaus, including:
- RentTrack: for all three credit agencies (Equifax, Experian, and TransUnion).
- Rental Kharma: for Equifax and TransUnion
- LevelCredit: for all three credit bureaus (Experian, Equifax, and TransUnion). Add rent, utility payments, and cell phone bills to your credit reports.
Just confirm that the credit bureau you're interested in considers rental payments before signing up for a service.
11 – Keep Old Accounts Opened
Maintaining inactive credit accounts can enhance your credit score, so be wary of closing them! Indeed, when you close an account, you reduce your available credit, which can increase your credit utilization ratio.
Additionally, closing an old account can decrease the average age of your credit accounts, which is another factor that can impact your credit score.
If you have old accounts you're not using, it's best to leave them open. Just make sure to keep them in good standing by making occasional purchases or payments to keep them active.
12 – Fix Late Payments And Stay Up-To-Date
Payment history is one of the most critical factors in your credit score, making up to 35% of it. Late payments can hurt your credit score, so making all your payments on time is essential.
Create a budget to help you stay on track, and consider setting up auto-pay to ensure you remember to make a payment. By working on improving your payment history, you can significantly improve your credit score.
13 – Pay Debt and Bills on Time
Paying bills on time is one of the most critical factors in maintaining good credit. If you have payment delays, it can be harder for you to borrow money in the future.
Action plan to pay your bills on time
If you're struggling to make payments on time, here are a few tips:
- Make a plan to repay your bills.
- Create a budget to help you stay on track and stick to it.
- Consider setting up automatic payments to ensure payments are made on the due date. You can set up auto-pay reminders or calendar notifications for due dates.
- Prioritize payments that have the biggest impact on your credit scores, like mortgages, car loans, and student loans.
- You can also request a payment plan from your creditors if you cannot pay your bills in full.
- Pay off debt as soon as you can. Try to pay off as much as you can afford each month.
Prioritize your payment obligations by paying bills with the highest interest rates or those that are past due.
Also, if you have difficulty keeping up with all your payments, consider consolidating your debts with a personal or debt consolidation loan.
14 – Use a Credit Builder Account
A credit builder account is a secured loan that helps you build credit over time. With a credit-builder account, you make monthly payments into an account held by the lender.
Once you pay off the loan, you receive the money you've paid in, plus any interest accrued.
While the money you pay in doesn't earn interest, the lender reports your payments to the credit bureaus, which can help to improve your credit score over time.
Credit unions, community banks, and online lenders typically offer credit builder accounts.
15 – Monitor Your Credit Score
Once you've taken steps to improve your credit score, it's important to continue monitoring it to ensure it's moving in the right direction.
Make sure to check your credit reports periodically for any errors or incorrect information. If you find anything that needs to be corrected, contact the relevant credit bureau as soon as possible.
You can use free tools like Credit Karma, Credit Sesame, or your credit card issuer's credit monitoring service to keep tabs on your credit score.
By monitoring your credit score, you can quickly spot any negative marks on your report or errors that need to be corrected. This can help you take action to fix these issues before they do any more damage to your credit score.
16 – Quick Tips For Improving Your Own Credit Score
In addition to the steps outlined above, there are a few quick tips you can follow to help improve your credit score:
- Refinance high-interest debt: If you have high-interest debt, consider refinancing it to a lower interest rate. This can help you pay off your debt faster and reduce the amount of interest you pay.
- Pay off collections accounts: Paying off collections accounts can make a big difference in your credit scores. Make sure to pay off the entire balance, not just the minimum payment.
By following the tips outlined above, you can take control of your credit and take steps to improve it over time.
17 – Reduce Credit Card Balances
Credit card debt can be overwhelming, but there are several strategies you can use to pay it down.
How to pay down credit card debt:
- One effective method is the avalanche method, where you focus on paying off the credit card with the highest interest rate first while making minimum payments on the others.
- Another approach is the snowball method, which involves paying off the smallest balance first while making minimum payments on the others.
Consider consolidating your credit card debt with a personal loan or a balance transfer credit card with a lower interest rate.
Regardless of your chosen strategy, it's important to prioritize paying down your credit card debt to reduce your overall debt load and improve your payment history and credit scores.
18 – Avoid credit repair scams
To avoid falling for credit repair scams, you should be cautious of any company that guarantees the removal of accurate negative information or demands upfront payment. The CROA forbids companies from collecting upfront payments. Also, many credit counseling services are available at no cost.
Before working with a credit repair organization, I recommend you check reviews and complaints on the Better Business Bureau and ensure the company is reputable and trustworthy.
DIY Credit Repair FAQ
What is the fastest way to repair your credit?
The fastest way to repair your credit is to pay down high credit card balances and dispute any errors on your credit report. These actions can have a quick positive impact on your credit score.
How can I fix my credit in 6 months by myself?
Fixing your credit in 6 months requires a disciplined approach to paying down debt, making all payments on time, and limiting new credit inquiries.
Consider negotiating with creditors for a payment plan or debt settlement.
How do I start fixing my credit?
To fix your credit, get copies of your credit reports from the three credit bureaus and review them for errors. If you find any mistakes, dispute them with the credit bureaus or the creditors. To improve your credit scores, pay down outstanding debts, make on-time payments, and keep your credit utilization low.
How can I clear my credit in 30 days?
Expecting to clear your credit in just 30 days is unrealistic. However, taking steps such as paying down debt, disputing errors, and limiting new credit inquiries can help improve your credit score in the short term.
How do you fix badly damaged credit?
Fixing badly damaged credit may take time and effort, but the first step is to address any outstanding debts and bring them current. Then, focus on paying down high credit card balances, disputing errors on your credit report, and limiting new credit inquiries.
How do I fix my ruined credit?
Start by getting a free copy of your credit report and checking for errors to fix your ruined credit. Dispute any incorrect information and pay down high credit card balances.
Is DIY credit repair worth it?
Yes, DIY credit repair is worth it if you have the time, patience, and knowledge to navigate the credit reporting system and dispute inaccurate information on your credit report. However, if you're overwhelmed or unsure how to proceed, consider working with a credit repair company.
Should I Fix My Credit Or Work With A Credit Repair Company?
It depends on your expertise, time, and the credit issues' complexity. You may handle it yourself if you understand the credit reporting system and can dispute inaccurate information. But consider working with a reputable company if you don't have time or are overwhelmed.
Should You Do Credit Repair On Your Own?
Many people wonder if they should do credit repair on their own or work with a credit repair company. While credit repair companies can be effective, they can also be expensive, and there are no guarantees that they'll be able to provide results.
If you want to save money and take control of your credit, DIY credit repair is a great option.
Conclusion
Investing the effort to repair your credit score yourself with the DIY credit repair process is vital to ensure you can manage and safeguard your financial future.
Best DIY Credit Repair Tips
By obtaining copies of your credit reports, reviewing them for errors, paying down outstanding debts, making on-time payments, and keeping your credit utilization low, you can take the necessary steps to improve your credit.
If you feel overwhelmed with the credit repair process or don't have the time to do it on your own, you can use automation with Credit Repair Cloud, one of the best credit repair software for businesses and individuals.
Remember, repairing your credit can take time and effort, but the rewards are worth it. Take control of your credit destiny today and start your journey to financial freedom.
Good luck on your credit repair journey!
Want to learn more? Read our article about the best credit repair tips to fix your credit score.
Disclaimer:
The guides and information on this website are purely for educational and informational purposes. Nothing on this site should be taken as legal or financial advice, nor does it replace the necessity of professional counsel. Please consult a local lawyer and professional financial adviser before making any decision that may affect your situation.
I am an independent Credit Repair Cloud Affiliate, not an employee. I receive referral payments from Credit Repair Cloud. The opinions expressed here are my own and are not official statements of Credit Repair Cloud.
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