How to Start Repairing Your Credit the DIY Way
DIY credit repair is free. You do the work yourself. You can pay companies hundreds of dollars a month to repair your credit, but you are essentially paying these companies to save you time. They do not have any special tools or tricks that will repair your credit. All you need is the knowledge and patience to perform the same actions for the same results for free.
How to clean up your credit
First, you need to know where you are now to get to where you need to be. You need to have your credit report from all three credit bureaus, Equifax, Experian and TransUnion. Once a year you are entitled to your reports from all three credit bureaus for free, at www.annualcreditreport.com or by calling the number 1-877-322-8228. This information will provide you with your account types and dates opened, credit limit or loan amount and the account balance and payment history. The report also shows credit inquiries and public record, collections, including bankruptcy, tax liens and civil judgments.
It is important to regularly review your reports for accuracy. The credit reporting system is responsible for over 200 millions files, and each month pieces of this data are updated by the billions, this requires a system built on speed and favored over accuracy. More than one in five people have found some error on their credit report. It is extremely important to review your reports for accuracy.
- Check your personal information your name, address and social security number.
- Check accuracy of accounts including credit cards, loans and debts.
What to do if you find an error
The first step of DIY credit repair is to write a letter to the reporting agency. Explain why you are making the dispute and include your documentation to show the mistake. You can also report the errors online however, disputing errors in writing through the mail reportedly produces better results.
If you don’t have any errors or after you have corrected errors you should look at the collection accounts that you have already paid.
Even after you have paid the account in full, collection accounts can remain on your report up to 7 years. You can request a goodwill deletion on collection accounts. There is no guarantee this will be granted but, if you write a letter to the collector explaining why you need the debt removed, it is possible your request will be approved. You may be surprised how often this strategy works.
Fix bad credit
Pay all your bills on time. The most important factor affecting your credit score is your payment history. Making on-time payments now will have a huge impact on your score over time.
Pay attention to your credit usage. Your credit utilization is measured by the amount of your credit limit compared to the credit amount you are using. High utilization percentage hurts your credit score. Ideally, you want to keep your credit utilization under 30%. Don’t close old credit card accounts. Keeping an open line of credit without a balance always helps your score.
Resist new credit, if you acquire too many hard inquiries within a two year time period your credit score will take a hit. Instead, opt to become an authorized user on someones account. This will not cause a hard pull for you and will help build credit history, as long as the primary account holder is making timely payments.
DIY credit repair
It is possible to fix your credit yourself if you follow the steps above. It does take some time and often persistence to accomplish the goal but, it is definitely worth it. The difference between a bad credit score and maintaining a good one can affect approval odds for loans, your interest rates, or even getting a house or an apartment.
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