How to Repair Your Credit and Build a Stronger Score

A credit repair process is not going to completely eliminate information from your credit report that is accurate, nor will it assure a certain credit score. It is entirely made up of two components: the first is correcting incorrect information, and the second is developing positive information over time. It is important to understand the process and that there is no exact time frame or potential score change that can be assessed based upon the credit report and the scoring system that is designated.

The credit repair process should not place a strain on your budget. You should avoid making a large credit payment that could leave you unable to cover essential obligations like rent and food.

Key takeaways

• Review reports from all three nationwide credit bureaus because their information can differ.
• Dispute only information you believe is inaccurate or incomplete, and keep supporting records.
• You should take preventive measures to eliminate new missed payments before implementing the next steps that have a smaller impact.
• Lower your credit card balances at a pace your budget can support; there is no specific utilization percentage that guarantees a positive score change.
• Treat anything that is promising to increase your score or remove accurate negative information with skepticism.

What credit repair can and cannot do

You have the right to dispute inaccurate or incomplete information at no cost. If an account, balance, payment, date, or personally identifiable information is incorrect, correction of this information will result in an updated and more accurate report, which could result in a change of your score.

Accurate negative information generally cannot be removed simply because it hurts your score. According to the Federal Trade Commission, most accurate negative information may be reported for seven years, and bankruptcy information may be reported for ten years. As the scoring models are not standard, negative information reported in the past may be weighted less than more recent information.

Credit reports may be used to generate many different credit scores. A lender may see a different score than the one you see using a consumer app. Rather than focus on a single number, it is more beneficial to manage your credit accounts responsibly and have accurate reports.

1. Review all three credit reports

Order your credit reports at www.annualcreditreport.com. Report checks from the consumer are considered a soft inquiry. Reviewing all three matters because a lender may not report to every bureau and an error may appear on only one of your credit reports.

Each credit report may be read consecutively. Understanding each of the major sections of a credit report will allow you to locate account, inquiry, public record information, and other related information.

1. Personal Information: Ensure that your name, address(es), and employer(s) are not listed in error.
2. Accounts: Ensure that ownership of the account, status and balance, credit limit, payment history, and whether the account has been closed or opened are all correct.
3. Collections and Public Records: Ensure that there are no duplicate listings. Also ensure that there are no unfamiliar listings or out-of-date reporting.
4. Inquiries: Identify hard inquiries tied to applications you made and investigate any you do not recognize.

Keep a dated copy of each report to create a baseline of reported information. You need information for future comparison to determine changes made to the database and to show evidence of reported information when problems are found.

2. Dispute errors with evidence

Contact each bureau showing the error and contact the company that provided the information. The Consumer Financial Protection Bureau explains that the standard investigation period is 30 days after a dispute is received, with up to 45 days allowed in certain situations. The company must send notice once its review is complete.

1. Identify the item described and explain how the information is inaccurate or incomplete.
2. Include copies of supporting documents such as statements, payment records, ID documents, etc.
3. Keep your dispute documented along with the attachments, confirmation number, and the result.
4. It is always best to assume the report has not been updated, so check the report after the investigation to ensure the requested changes were made.

A dispute should only be submitted for information you believe to be inaccurate or incomplete. It is not a means to remove a valid debt or an accurate record of a late payment. If the result does not satisfy your concerns, the explanation provided should include your next steps, which may be submitting a statement of dispute or a complaint to the CFPB.

If an account or inquiry appears to result from identity theft, use IdentityTheft.gov to develop a recovery plan. You should also consider placing free security freezes with each of the three credit bureaus. A freeze restricts access to your credit file, does not affect your credit score, and must be managed separately with each bureau.

3. Stop new late payments

Payment history is an important input in widely used scoring models, so stopping a new delinquency is generally better than seeking a quick game for a score increment. Design a payment system that is convenient even when the month is busy.

• Create a calendar that has all payment due dates, minimum payments for each, and payment options.
• Set reminders for several days before the due date to ensure payments have been processed.
• If you opt for autopay, ensure you have sufficient funds in the connected account and watch out for returned payment or overdraft fees.
• If you are aware you cannot make a payment on time, contact the creditor and ask about flexible payment options, a change in due date, or a payment plan. Ask for agreement confirmation in writing.

If a payment is missed, do not presume each lender has the same reporting or timeline. Missed payments on loans can result in collection activity or credit reporting, fees, or a change in the status of your account, depending on the contract and applicable laws. Read the contract and contact the lender to know your options.

When you cannot make minimum payments, a reputable nonprofit credit counselor can help assess a budget or debt management plan. Ask about fees, credentials, and contracts, and confirm any proposed plan with your creditors before making payments.

4. Lower revolving balances without chasing a magic number

Credit utilization compares revolving balances, such as credit-card balances, with available limits. High utilization can hurt a score, but 30% is guidance rather than a universal cutoff. Lower can be better, and scoring models may consider both overall and per-account utilization.

First, implement a short-term budget for the credit card by a policy of refusing to run new charges and by allocating more than the minimum payment to the card, without draining emergency cash. Card issuers commonly report account information on a periodic cycle, but the date and balance reported vary. Paying before a statement closes may reduce the balance that appears on a report; it does not guarantee a particular score change. The CFPB’s credit-rebuilding guidance emphasizes staying away from credit limits and paying card balances in full when possible.

The closing of a paid-off line of credit may increase credit utilization, but retaining open lines of credit is not always the best choice. Weigh annual fees, the temptation to overspend, fraud monitoring, and the issuer’s terms. Do not carry a balance or pay interest merely to build credit.

5. Be selective about new credit

New credit is not required to repair errors, and borrowing solely to raise a score can add costs and repayment risk. Before applying, decide whether the product solves a real need and whether the payment fits after essential expenses and savings.

A lender’s review after an application is generally a hard inquiry and can affect a score. Checking your own reports and many prescreening or account-review checks are soft inquiries and do not. Knowing the difference between hard and soft checks will enable you to determine which types of credit checks affect your score.

• Secured credit cards: Look for cards that allow for lower deposits, lower fees, no annual fees, and/or a low APR. Pay attention to whether the issuer reports payment activity to all three nationwide bureaus.
• Credit-builder loans: Review the total cost, and confirm the practices around reporting. Do not assume that on-time payments will produce a set score increase.
• Any type of loan: Review the total cost of the loan, fees, practices around data security, and the terms for cancellation or return. Do not apply for multiple loans with the hope of getting approved by one.

If you have bad credit, don’t rush to apply for credit; compare alternatives to borrowing with bad credit before adding a payment. Negotiating a bill or applying for community financial assistance may address the need without creating another debt.

Track progress without expecting a fixed timeline

There is no reliable 30-, 60-, or 90-day promise for credit repair. An updated report and a scoring recalculation may reflect the correction of erroneous information. However, the effect of accurate negative reporting usually changes gradually. Track report accuracy, on-time payments, revolving balances, and the number of new applications. This is a much better use of your time than checking your score every day.

Check reports again after you win a dispute case or a significant change has been made to one of your major accounts. If a creditor reached an agreement to a hardship arrangement or correction, double-check what they’ve agreed to versus what is reflected in these reports. Keep the documentation even after the dispute has been resolved.

Avoid credit-repair scams

The FTC has stated that it is unlawful to remove accurate and recent negative items from a credit report; however, should you feel that you have been a victim of a credit repair scam, you are encouraged to file a complaint with the FTC (https://www.ftc.gov/).

Some of the signs that a credit repair professional is involved in an illegal practice include the requirement of payment prior to the rendering of services, the suggestion that you dispute validated information, the recommendation that you file a fraudulent identity theft report, and the promise that they can create a new credit identity for you (which includes the use of a new Social Security number).

In order to protect yourself, do not provide your Social Security number, bank login information, or report login credentials to anyone until you have confirmed who will receive the information, the reason it is needed, how it will be safeguarded, and the cost to you.

Frequently asked questions

Will paying a collection remove it from my credit reports?

Payment of the account may change the status and the outstanding balance on the account, but this does not guarantee that the account will be removed from your credit reports. Payment of a collection may or may not affect how scoring models will view the account. You should confirm who the collector is, check the account to ensure the debt is valid, and get the collector’s Agreement to the terms of the settlement in writing. Check your credit reports to ensure the account has been updated.

Does checking my own credit lower my score?

No. Requesting your own credit report is a soft inquiry. A hard inquiry usually occurs when a lender checks your credit because you applied for credit.

Should I dispute every negative item?

No, you shouldn’t. If you believe that the report contains erroneous or incomplete entries, you should feel free to submit a dispute. Repeatedly disputing accurate report information is futile, as it will not remove the information. Focus on steps that will improve your financial situation.

How fast can a score improve?

It’s not possible to predict how many points you will achieve or by what date it will happen. It depends on the report data, how frequently companies send new reports, and the scoring model. You can focus on the following: ensuring reports are accurate, making on-time payments, lowering credit card balances, and limiting applications for credit.

Build a stronger record one reporting cycle at a time

A solid credit repair plan is like having a roadmap. It means correcting errors on your credit report, protecting every due date, paying down credit cards you use within your means, and avoiding unnecessary new credit applications. These actions cannot guarantee a score, but they can improve the information on which scores are based and help avoid new damage to your report.