How to Fix my Credit Score

A poor credit rating can cause you issues in a wide variety of ways including: failure to get a job, inability to buy a home, inability to finance a vehicle, inability to receive any loan, paying higher interest.

If you have a low credit rating, there are steps you can begin to take right now that will start to raise your credit score. No matter how damaged your credit score is, you can start to raise your score.  

The first step is always to pull your credit report. You can get a free copy of your credit report here. Federal law allows you one free credit report, per agency, per year. You can also pull your credit report for Transunion and Equifax by following the directions here.  Consider paying for your credit report if you plan to dispute any negative items because the law requires the credit bureau to remove any item that the creditor fails to respond to in 30 days. This means that even if the negative item is yours, if the creditor fails to verify the debt within 30 days, the credit agency must remove the item and it cannot be placed back on your report at a later date.  However; if you order the free credit report, the credit agencies now have 45 days to complete your investigation.

Carefully review your credit report and note any errors you find. Check closely for incorrect balances, wrong dates, and wrong payment amounts. Highlight any negative item with an error and dispute these items to each of the three credit bureaus. You can read more on disputes here. Do not dispute any positive account as you risk losing the entire positive credit history. Any successful deletion of a negative item off of your credit report will cause an immediate rise in your credit score.

Get all balances on your credit cards down below 20% if possible. This will give you the best, positive effect on your credit score. Your debt to available credit ration accounts for a full 35% of your credit score so lowering the amounts owed will have a very fast and positive effect on your score. This is the one step that you can change your score almost immediately.

Quit missing payments. Your payment history accounts for 30% of your score and can devastate your credit score. Missed payments over two years will have less damage to your score.

Finally, no matter how poor your credit score is, you can get a secured credit card. A secured credit card is when you place a certain amount of money as collateral and the card issuer will give you a visa or mastercard. The minimum amount is usually $300. If you want to have a $1000 credit line on a visa or mastercard, you will deposit $1000 into an interest bearing account. The card issuer holds these funds in case you fail to make your payments. The great part about the secured cards is they do report to the credit agencies so with each month, you will be building positive credit history and your score will begin to creep up.

After approximately a year, if you have handled your account well, made all payments, the card issuer will review your account and may choose to convert the card to an unsecured card and will mail you back your deposit, with interest.  To raise your score faster, consider opening two secured credit cards. Make sure you choose a card that does not charge a fee and reports to the credit bureaus and offers guaranteed approval. You can read more on secured cards here.

Raising your credit score can take some time but if your score will never go up on it’s own. Once the damage has happened, you need to be proactive to start the upward climb. If you follow the steps above, within 18 months, you can easily see a credit score rise of over 100 points and see a big difference in your credit future. It all begins with you and it is time to repair the previous damage. You can do this!