You want to learn how to fix your credit, but you’re unsure what to believe, what works, and what is a costly waste of time. Improving your credit takes time and a bit of focus. However, there are tools available that can provide you with some exceptional support in the process.
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Know There Are Numerous Options to Consider
To learn to fix your credit, you need to consider the wide range of methods available. However, there are a few key things to remember as you make these decisions.
- Credit scores improve when you make ongoing, good financial decisions. Even small ones make a big difference!
- Credit score calculation is always changing, and that’s a good thing because it means you can always see an improvement.
- Using credit is necessary if you want to build credit. Credit scores are a way for lenders to learn if you are a reliable credit user. So, don’t be afraid to start using credit.
- There is no credit repair service that can do anything for you that you cannot do yourself. That is, knowing your rights and how to manage credit can help you see big changes.
- It is worth it to improve your credit score. It will help you have access to borrow money in the future, increase your available credit, and help you save money on loans, credit cards, and even car insurance.
Where do you get started then? Here, we detail a variety of tools and resources that you can use – in combination with each other – to help you build your credit score. Work through each one, apply it to your needs if it fits, and watch your credit history improve.
Start with a Copy of Your Credit Report
To know how to improve your credit score, you need to first make sure everything on your credit report is accurate.
Go to annualcreditreport.com. This is a site where you can get a free copy of each of your credit reports from the credit bureaus, including Transunion, Equifax, and Experian. This is the only site that these three organizations work through to provide access to a free credit report without any cost to you. You get one every 12 months.
Look at the information contained there:
- Are your name, address, and identification information accurate? If there are addresses or names you have never been associated with, that could be a risk for identity theft.
- Are all of the accounts listed yours?
- Do the accounts have positive credit history information or do some have late payments?
- Is the available credit listed on them accurately?
- Are there any judgments on your credit report? Are they accurate?
If you find any information that is not accurate, use the tools from the credit bureau to refute them. This forces lenders to verify the information. If they cannot do so, it must be removed. You can do this by filing a dispute letter right on the credit bureaus’ websites. Keep in mind that this is just one step to fixing your credit. It will not help you boost your credit score if you have financial trouble. For that, you need to show that you can make good credit decisions.
Start Building Credit
If you do not have credit or you have a bad credit score, that makes it hard to borrow money to rebuild your credit. One of the best ways for you to build a higher credit score is to establish new credit that can help you show that you are able to make wise financial decisions.
Check out Self
A good way to do that is Self. It is a super simple tool to use that allows you to build credit. You apply for the company’s Credit Builder Account. Then, you pay off the amount over time. You choose the payment terms and the amount. Every time you make an on-time payment that is building your credit history for you. Monthly payments like this help you to establish a long history of making wise financial decisions.
With each of your monthly payments, it builds your credit history, and you add to your savings. The monthly payments are then reported to all three credit bureaus.
Eventually, you will pay off your Credit Builder Account. That then unlocks the funds, which have grown in value in a CD. That means you can keep that money – the money you paid into the account for as long as you do. You just have to pay fees for this.
Here are a few reasons we recommend Self:
- There is no hard credit pull on your credit score. That means requesting and opening an account does not hurt your credit score.
- You can automate the payments. That way, you are never making a late payment that can hurt your score.
- You can track your credit score over time. It’s easy to see the value of using Self because your score could improve each month.
If you change your mind or need to stop making payments, you can cancel the service at any time.
Experian Go
Another tool for building your credit score and credit history is Experian Go. Experian is one of the credit bureaus. Here’s how their program works.
Sign up for the free membership on the Experian website. You can download the app right to your phone. The next step is to establish your credit. The organization will help you to do that by providing you with options to help you rebuild credit. You also will get your FICO credit score at that point. The organization also will provide you with tools that can help you to build good spending habits and to make better financial decisions.
Experian Go is beneficial in several ways. First, it helps you to define your credit journey – it helps you know what to do based on your credit profile to improve your credit score. It helps you to establish credit, get your score, and teach you about credit as well.
Get Current Credit Under Control
One of the most important things to help you rebuild credit is to get your current credit usage under control. If you have a credit card balance that is over the limit, that is going to continue to hurt you each month. If you are behind on monthly payments, it is downright hard to get caught up.
Instead of ignoring that credit card account, call all your accounts. Ask them if they will extend your credit limit to the amount of your current balance. They may be willing to help you to remove some of the fees as well. The key here is to reach out to them. Tell them why you have late payments and inform them of what has changed.
Many lenders would rather work with you to create a debt repayment plan than have you simply write off the costs or file bankruptcy. If you can get them to make these changes, then focus on those accounts as the ones to make on-time payments with each month. Over time, outstanding debts fall, and you’ll work to improve your ongoing credit history.
Educate Yourself – Even More
A wide range of factors impacts your credit score. It can be difficult to know how to fix your credit because so many things can impact it.
A good starting point for many is MyFico.com. FICO is a specific credit score that many businesses use. It is one of the most important numbers you have. Your FICO score helps lenders learn more about your ability to make payments on time.
What you should use MyFico.com for is education. You can learn how your FICO score is calculated, what factors could be impacting your ability to get a higher credit score, and guidance on obtaining new credit.
MyFico.com is a tool to take full advantage of, and there is no cost to you. FICO Free Plan is one of the best ways to get back on track. When you start a free plan, which is the first step, you can get Equifax credit monitoring services. That means that one time every month, you will get a free credit report from Equifax. You do not have to use a credit card to sign up.
Then, you can decide to upgrade to one of the higher levels of service at MyFico. That includes the MyFico Advanced plan, which allows you to use credit monitoring for all three credit bureaus with updates every three months. It can help you to see your credit score for auto loans, mortgages, and more, so you know just what your potential lenders will see. This plan also provides you with identity restoration and $1 million in identity theft insurance. It provides identity monitoring to help you to pinpoint threats and stop them.
The organization also offers a third plan, the MyFico Premier plan. You get updates every month with this service. You get all of the same services as the Advanced Plan, with monthly updates to each of your credit scores.
Even if you only use the free plan, it is well worth signing up and setting up MyFico. It provides you with a great deal of information on the following:
- What your score is
- What is changing on your credit report over time
- And how to see improvements in your credit score over time
There are a few more things that make this one of the best ways to work to improve your credit score.
- MyFico does not hurt your credit score. You do not have an inquiry on your report when you use this service.
- You get incredible security – the company calls it bank-level security.
- If you need help, such as due to identity theft concerns or credit monitoring service needs, the toll-free support is US-based.
It only takes a few minutes to sign up for your MyFico free plan. We suggest at least getting started there to get your score.
Credit Repair Company
One of the ways you will see promised as a way to fix credit scores is the use of a credit repair company. This type of company could be helpful, but they do charge a fee. If you want to use these types of credit repair companies, you have to be very careful about what you are doing.
- A credit repair company cannot make changes directly to your credit report.
- If they promise you that they can fix your credit or provide you with a good credit score, they are not being accurate or fair.
- Some credit repair scams are out there – and they can be expensive.
If you plan to use credit repair companies, review them heavily. Make sure you know what they guarantee to do. Remember, they cannot change what is on your credit report from a credit reporting agency. They do not work directly with credit reporting agencies, either.
Know the Risks of Credit Counseling
The goal of credit counseling is to help you get out of revolving debt. They do not provide credit repair services. A credit counseling agency will work with you to determine what your credit accounts are, then work with your lenders to create a repayment plan. A reputable credit counseling agency does charge a fee, but it should be minor.
In many situations, using credit counseling will hurt your credit score in the short term. However, if you follow the plan to repay your debt with the help of a credit counseling agency, you will see your credit card balances start to drop. You will see improvements in the number of missed payments you have.
However, because many credit reporting agencies will close existing credit cards, that can hurt your credit score right away. You will set up a payment plan with the credit counseling agency to make monthly payments to pay down any remaining debt you have after they negotiate for lower interest rates and a more affordable monthly payment.
What happens when you try to repair credit like this?
- You will see a freeze on your credit limit. You will likely not be able to use your credit accounts.
- You will set up a payment plan where you will pay the agency a set amount of money each month.
- The agency will work with your credit card debt holders to lower interest rates and sometimes reduce your debt owed.
- Credit counselors help you get debt under control, which means your minimum payments may change, sometimes being more affordable to you.
- This will be noted in your credit file.
Create a Credit Repair Plan of Your Own
Using the tools provided thus far, it is time to start creating a credit repair plan to address your specific needs. Here are several steps to do so.
#1: Check your credit report
Every four months request a copy of your credit report from annualcreditreport.com from one of the credit bureaus. Use this to track improvements and accuracy. Check your credit score regularly to monitor changes, including in your credit utilization rate, revolving debt, and installment loan payments.
#2: Avoid closing older credit
The average credit age makes a big difference in establishing and maintaining your credit score. If possible, don’t close accounts listed on your credit report. The long credit history established with these older accounts is valuable to you over time.
#3: Find ways to pay down your debt
You will need to work to reduce your debt. That is hard to do, especially when you have a lot of debt. Find a few ways to reduce your costs or make money to put towards paying down your debt. Here are some tips:
- Stop eating out. Use all of the extra you spend to buy meals to put towards your debt.
- Find free options for the services you pay for. One key example of this is EASY Wireless. For those who qualify, it provides free access to smartphones and free cell phone service.
- Find ways to lower your utility bills.
- Seek out government assistance if you qualify for it. Use anything extra you qualify for to help you to reduce your debts.
- Start a side gig. This could be delivery services or even a part-time job.
- Create a debt avalanche method or another debt repayment plan like the snowball repayment method. This creates a plan to help you lower your costs.
#4: Work to build new credit
To get a great credit score, you need to use credit. Credit utilization helps you to build up your score over time. How do you do that when you have a limited credit history, though?
- Consider a secured credit card. Those that submit credit report information can help you to build up that limited credit history over time.
- Add Self to your to-do plan. It is one of the simplest ways for you to work towards high credit scores by helping you to show lenders you can make payments on time.
- Consider a new loan. Auto payments are a good way to boost your credit score since they tend to have a lower interest rate. If you open a new credit card, look for one that you know you qualify for, and that offers the lowest interest rate possible with no annual fee.
You may see your credit score fall by a few points when you initially apply for these new offers. However, over time, this will improve. You may even get good great credit score numbers if you continue to make good financial decisions.
#5: Consider a credit counselor
For some people, credit repair help through a credit counselor is a good idea. If you are simply behind on your payments and have not found a way to get caught up, it may be time to look for a more aggressive option.
A nonprofit credit counselor can at least provide you with information about what your options are. They can look at your credit report information, analyze some options for you, and even provide you with some insight into whether or not credit counseling is the route for you. Look for a credit counselor that is approved by the Financial Counseling Association.
What Will It Take to Get a Better Credit Score?
You know what the options are for helping you to fix your credit, but what is really going to get you to that point?
- Work to lower your credit utilization ratio. Lower how much you owe on each of your credit cards. That helps to improve your credit utilization ratio.
- Make sure your payment history is perfect or as close to it as possible. Set up auto payment so that your payment history shows you are making on-time payments every month. Your payment history will help improve your credit score over time.
- Deal with any collection accounts. If you have any collection accounts for nonpayment or being behind on payments, contact those lenders. Tell them about your situation. Ask them to work with you to create a plan to remove the information from your credit report if you make a payment.
In addition to these steps, as you see your credit score improve, continue to add new accounts that can help to strengthen it even more so.
For example:
- Find out if you qualify for a balance transfer credit card or installment loan. That way, you can transfer high-interest rate credit to a card that is more affordable to pay off.
- Use auto payments. If it is time to buy a car, find a low-interest auto loan. Make payments on time.
- Move towards the home-buying process. Even if you are not there yet, you could be. The home-buying process will become an option as you work towards high credit scores – but you do not have to have a perfect score to qualify. Getting a loan to buy a house and then making payments on time can further help you improve your credit.
Are You Ready to Get Started?
There are a lot of steps here. Just start with the first one and work through the process. Make sure you check out all of the tools that can help you, too.
Find out if you qualify for EASY Wireless and a free smartphone.
