Bad Credit Repair Tips That Work

Bad credit should be a temporary state in life and not a permanent description of your finances. You might have made a few financial mistakes in the past, but it’s time to do something about your bad credit. Fixing bad credit can be painstaking but the reward is worth it. Here are some bad credit repair tips that will work for you.

Now

There are several steps that you can take right now to improve your bad credit. Your first action is to get all three credit reports from the three major credit reporting bureaus—TransUnion, Experian, and Equifax. You are entitled to one free copy a year and an additional copy any time you’ve been denied credit. Examine the credit reports for any errors or discrepancies. Should you spot an error or would like to dispute an item, send a letter to the credit bureau along with proof of your claim. The credit bureau has thirty days to respond and/or correct the item. This can improve your credit because negative items may have been duplicated on your report, while some positive items may have been omitted.

Another step you can take immediately is to stop making credit inquiries. Every application for credit is noted on your credit report and affects it negatively. If a retailer needs to check your credit, decline it. If a credit card offer arrives in the mail, decline it. You already have bad credit—don’t apply for anymore!

Next Three Months

Over the next three months, you can steadily improve your credit if you are diligent. If you have any credit cards, pay more than the minimum monthly payment. In fact, if your credit card balances are high, you need to pay them down to 50% or less of your credit limit. Be careful not to close any of your credit cards at this time as this will negatively affect your credit to debt ratio—just concentrate on paying what you owe.

Also, if you had any delinquent accounts on your credit report, you can make arrangements to begin making payments, whether with the original company or the collection agency. If the balance is low, such as under $500, you should consider paying the debt off in one lump-sum payment. If you have any debt collectors harassing you by mail or phone at this time, this is your opportunity to negotiate payment.

Next Six Months

Even though you’ve only been working on improving your credit for three months, your credit score and credit history will be steadily improving. Continue paying down credit cards and paying all bills on time. Also, continue denying others access to your credit history and refrain from applying for new credit. The hardest work is behind you!

At this point, you may consider obtaining a secured credit card. The issuer of the secured card requires that you pay to them the amount of the credit limit being issued to you; however you use the card like a credit card. No one has to know your credit card is secured but you and it shows up on your credit report like a normal credit card. Should you get into financial trouble, the credit card is paid off when the account is closed with the amount you initially deposited.

Next Six Years

The next six years of your bad credit repair don’t involve much action from you except waiting. Many items can only be removed from your credit report after a certain period of time has passed. For most items, that time period is seven years. This includes derogatory items such as bankruptcies, settlements, and charge-offs.

This time period is also your opportunity to begin building good credit. While no one can tell you how much you can afford, this is the time to make a big purchase that requires payments and is reported to the credit bureaus. For example, you may purchase a smaller item like furniture or electronics at a retailer that offers a line of credit. Or you may make a larger purchase, such as financing a car. The important aspect is that you faithfully make your payments on time every month. Purchasing a home may not be a good idea at this time if your credit still isn’t the best.

During this time period, you should still check your credit annually and watch for errors on all three credit reports. You also could try enrolling in a credit monitoring service that monitors changes in your credit report and provides a credit score. It costs a nominal monthly fee, and many consumers think it is a valuable service.

If you begin now, your bad credit can be repaired in no time. However, some consumers do not feel comfortable trying to repair their credit alone and seek out credit repair companies for help. This can be costly, and sometimes consumers are tricked and scammed, but it does work for some. Taking that risk isn’t necessary though, because you have the tools to repair your credit. Don’t wait—start today!

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