Repairing bad credit is a test of patience and discipline. Whether you’re looking for ways you can restore you own credit or companies to do it for you, there are dozens of resources on the internet that can help you restore your credit. As with any industry, however, it’s still important to exercise caution when dealing with companies who guarantee they can repair credit fast.
Credit Cleanup – How to Restore Your Credit
While it’s true some companies will have a time advantage over some others, repairing your credit score still takes time. Depending on how poor your credit score is when hiring a company also effects the timeframe which you can expect your credit score to increase.
There are reputable credit repair services out there like Lexington Law, if you are interested in hiring a company. If you’re searching for resources to do it yourself, you may find yourself browsing through our humble site (thank you!) The options seem endless when you’re looking for ways to restore your credit. See Your Personal Finance Tips’ credit repair reviews today.
The first step in credit restoration is always to retrieve your credit report from any of the three major credit bureaus. Your credit report will give you an idea of what creditors see when they review your loan or credit card application.
There are many different bureaus, but the three major agencies are Experian, TransUnion, and Equifax. According to Experian, you are entitled to receive a copy of each of the major bureau’s report once per year.
Do you request them all at once or look at a different bureau every few months?
That depends on what your goals are. We typically suggest you look at all three of your credit reports at the same time of year, so you can tackle any major problems or discrepancies you may find, as each report may have slight differences. This is especially important if you are planning to acquire a mortgage or a car loan soon, as these companies typically check multiple credit reports to determine your approval.
If you’re trying to improve your credit but are not planning on any major financing soon, it’s probably best to spread the reports out over the course of the year. This will help you monitor any issues that arise throughout the year and keep you up to date on your current credit score. This is a typical practice for many people who have restored their credit in the past and simply want to keep tabs on it.
Once you have a copy of your credit report, it’s important to look at every detail. It’s easy to assume the information will be correct – such as your date of birth or even your name – but sometimes credit bureaus make mistakes. When you get the report in, your job is to determine any possible inaccuracies, errors, or unverifiable information. You can dispute incorrect and unverifiable information through the bureaus and creditors. The bureau is obligated to remove any incorrect information after initiating an investigation. It is important to note that the bureau cannot remove accurate information, even if it is negative.
The next order of business in your credit clean-up is to catch up your delinquent accounts. Removing negative, false credit items on your credit report is only one piece in the puzzle. Establishing a positive recent payment history is essential to raising your credit score. On average, your payment history makes up 35% of your score. At Your Personal Finance Tips, we believe this is why so many people find credit repair companies to be shams or knockoffs, because they’re only taking care of part of the problem, not the whole, so they never see the best results they can. With how dramatically a positive payment history can affect your credit, it’s no wonder why so many companies staff financial advisors to help their customers work on handling their money correctly. In the end, the sooner you get caught up on past-due, collections, and charge-off accounts, the faster you can start re-establishing your credit score.
Once you establish a stable payment history, you may want to apply for one or two low-limit cards to expand your credit file. This will help you establish a stronger positive credit history that is active, which shows creditors that you are currently in the clear and ready to take on new debts.
If you are still unable to get approved for regular credit cards due to credit inactivity, there’s a good chance your local bank or creditor may approve you for a secured credit card. A secured credit card is a type of card where you pay a security deposit to receive credit. You may even be eligible for a retail credit card, which is often extended to individuals with small or spotty credit histories.
The most important part of taking on a new credit card is this remembering to keep the balances low and the payments up to date. If you default on any of your payments, it has the potential to impact your credit score faster, undoing hard work spent reclaiming your score.
This is only the tip of the iceberg. Restoring credit is a long and sometimes difficult process with many different factors playing into what your score shows. Any lapse in payments can quickly drop your score, no matter if it’s a new credit card payment or a debt you’re current on, but still paying off.
We know this process is tough, but it’s okay. We believe in you; you can do this and get through the debt, whether it’s a slow simmer or burning a hole in your pocket. If you are patient and learn healthy financial habits, you’ll see an improvement in your credit score and a whole new world of options will open up in front of you. Financial responsibility sets an example for not only your own habits, but also to everyone around you.