Category Archives: Credit report basics

Credit Report 101: Understanding the Contents of a Credit Report

Staying on top of your credit reports can help you to discover errors that might be affecting your credit scores. It can also alert you to the possibility of identity theft. Disputes can be filed to have the errors removed, resulting in potentially improved credit access and terms. First, learn how to access your personal credit report information for free. 

There are two ways in which you can obtain credit report information without charge:

  • You can get a free copy of your credit report from the three credit bureaus using AnnualCreditReport.com. This was originally available once a year, however, due to the COVID-19 pandemic, it is now possible to obtain a free report every week up until the end of 2023.
  • Various personal finance websites, such as NerdWallet, provide free credit report details. NerdWallet also gives access to the VantageScore 3.0 from TransUnion and refreshes the report on a weekly basis.

Understanding the Contents of a Credit Report

The contents of a credit report remain the same regardless of the bureau, though the sections may be positioned in a different order. Once you know how to read a credit report from one bureau, you got all covered. Generally, the report is comprised of the following components:

Personal Information

The data concerning you that will be collected encompasses past and present names, contact details, partially concealed Social Security number, date of birth, and current and previous places of employment.

It’s not uncommon to find multiple spellings of your name when searching online. These can include the name you used when applying for credit, a married name, the name with or without a middle name or initial, and even an abbreviated version of your first name.

If any of your employers or phone numbers are missing, it’s not a big deal However, take note of any addresses that are unfamiliar to you — particularly if you notice accounts that you do not recognize. This could signify that somebody has employed your personal details to create false accounts under your name. Promptly report identity theft if you uncover it.

Account Details

Here you will find a list of all your accounts that remain up-to-date and have not been taken to collections agents or gone into default. This information is the main focus of your credit report. At the beginning of each account, you should be aware of the following components, which appear as a summary:

  • Information needed from the creditor: the name, address, account number, and the date that it was opened.
  • The condition of the account – be it active, closed or transferred – and if you are up to date with payments must be noted. Accounts in a good position when the COVID-19 payment arrangements were initiated must still be reported as present. 
  • The type of financial account (such as a credit card or student loan). 
  • If you are the sole proprietor of the account, have joint ownership, or are an authorized user.
  • The original sum of the loan which is to be paid in installments.

When looking at your report, you’ll find details about your balance and payments, including the date when the creditor last shared info with the bureau. However, this amount may not be up to date with your current balance. For example, even if you make all payments for your credit card on time, the report may still show a balance if the activity was reported during the billing cycle.

Verify that your payment history is accurate, ensuring that any late payments reported are accurate. Additionally, confirm that the credit limits associated with your accounts are correct as they will have an impact on your credit utilization ratio, and in turn, your credit score.

If a credit account has been terminated, your credit report will indicate the person who closed it and when. Accounts that were closed in good standing can remain in your credit report forever. Accounts that were shut down by the lender because of your failure to meet payment obligations should be wiped from the report after seven years from the date when the account first became overdue.

Any unfavorable information

The credit report will display any accounts that have not been paid according to agreement, as well as collections and public records such as bankruptcies. Generally, this negative information will remain visible on the report for seven years, except Chapter 7 bankruptcies, which stay for 10 years.

Make sure any negative information reported in this section is accurate. If you notice inaccurate accounts or collections, or something that is being listed after it was supposed to be removed, dispute the entries quickly to have them taken off your report.

Credit Inquiries

Your credit report contains a section that shows when someone has taken a peek at it. You will come across these inquiries when you are looking to apply for a new line of credit or an increase in your limit, as well as when you are applying for a mortgage or signing up for utilities. The entries may be classified according to type.

  • If you give the go-ahead for a creditor to review your credit report to assess your application, a hard inquiry is initiated. This will likely result in a slight, fleeting decline in your credit ratings.
  • When you personally review your credit report or a possible lender considers whether to present you with an advertising offer, a soft inquiry is made that has no influence on your credit scores.

Ensure that the name, address, and date of the organization are included in both types of inquiries. Additionally, make sure that any hard inquiries were approved by you and that they will disappear from your report after two years.

What Facts are Excluded from the Credit Reports You Receive?

You can’t find your credit score on your credit report. Nevertheless, the information on the report is important for determining your credit score. Here are some other elements that are not included in the reports:

Compensation

This can include base pay, bonuses, stock options, and other forms of compensation. Your salary is not a factor in your credit reports or scores, yet it still has a substantial impact on your day-to-day life.

Occupation Status

A person’s job status can be of great significance. Credit reports tend to include your places of employment as part of the identification process, but do not indicate when your employment with those companies came to an end. This data is gathered from applications for credit you have previously filled out.

Marital Status

Marital state and the credit history of a partner are factors that have an effect on your own credit score. When you tie the knot, your credit reports do not. Each individual will still have his or her own credit report and it will not influence the other’s. However, it is worth noting that any accounts opened together, such as a mortgage or shared credit cards, will be reported on both credit reports, and any mistakes like late payments may have an effect on both of you.

Possessions

No information about your financial assets, like bank accounts, 401(k)s, and investments, is present on your credit reports.

Taking a Loan From a 401(k) Plan

Borrowing from yourself does not get reported on credit reports; however, it is usually not recommended as it could hurt your savings for retirement.

If You Find Problems, Dispute Them

If you uncover errors on your credit report that could be damaging your scores, you’ll need to provide proof in order to support your claim. You can challenge credit report mistakes with the credit agency by giving them copies of paperwork that verifies your identity and outlines why the information is wrong. The bureau has a 30-day window to investigate and reply, though due to the pandemic, the Consumer Financial Protection Bureau has issued guidance prolonging that to 45 days.

FAQs

How do I get my credit report?

You can obtain your free credit reports from the three main credit bureaus by visiting AnnualCreditReport.com or an online financial resource that supplies free credit report details, such as NerdWallet. After that, analyze the information and search for any discrepancies.

What information is included in a credit report?

Your credit report will feature your personal details, current accounts, queries, and any negative markings, including bankruptcy, that might be present.

What is an acceptable range of credit scores?

Having a high credit score is typically between 690 and 719.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

How to Read a Credit Report

Your credit report provides information about your overall financial status. Reading a credit report is the best way to grasp your financial picture. It may seem challenging at first, but deciphering your credit report is incredibly simple.

Your credit report is used to determine your credit score as well as other financial decisions, and it is essentially a detailed record of your credit history. Our best credit report advice is to learn how to read a credit report and to check for errors at least once a year.

Getting a Credit Report

You can get a credit report by requesting one from one of the credit bureaus. The AnnualCreditReport.com website allows you to get one free copy of your credit report from Equifax, Experian, and TransUnion each year. To get all three reports at once, you must order directly from AnnualCreditReport.com.

How to Read Your Credit Report

All three credit bureaus should provide accurate information in these five categories, though the information may be slightly different.

Your report will include information about your name (including previous names and aliases), your Social Security number, and your birth date. It will also have your current and previous addresses and contact information like phone numbers and email addresses.

1. Personal details

Look out for misspellings and incorrect personal information.

Every aspect of your credit report must refer to you, not to your dependents, not to your ex-spouse, and certainly not to a person with the same name. Make sure that your personal details are correct.

Something is awry when you see a misspelt last name, an incorrect middle initial, an incorrect Social Security Number digit, or a phone number that does not belong to you. These are all indications that your report may have been confused with someone else’s.

2. Job experience

Your credit report includes current and previous employers’ information in the personal information section.

Make sure you recognize all of the employers listed.

Your employment history doesn’t affect your credit score because it doesn’t have anything to do with your credit or debt. Incorrect information like employer names you don’t recognize or employers you never worked for is a warning sign that you should verify your identity.

3. Credit history

The FICO credit score is calculated from quite a few factors, including the amount owed (30%), the length of credit history (15%), new credit (10%), and credit mix (10%). Your payment history, however, accounts for 35% of your credit score calculation.

Paying close attention to the sections that list your credit history on your credit score is critical since it has the most important pieces of data used to determine your credit score. The following information is included in a credit report as part of your credit history:

  • Payment history: This shows the details of all your payments. More specifically, if you made the minimum payments and how timely you are at making them. All missed payments contribute to a negative report. 
  • Closed and current accounts: Your accounts for the last seven to ten years will be listed. Whether it’s a joined account, individual account, or you’re an authorized user of any account, it will show up. There will be auto loans, student loans, mortgages and other installment loans as well as any revolving credit. 
  • Current balances: the highest balance on your accounts, as well as the current balance in the account when the creditor reported to the bureaus, will be listed.
  • Creditors/lenders names: All the listed accounts will have the names of all your creditors and the date the accounts were opened. 
  • Loan amounts or credit limits: This will show the credit limits for your current revolving accounts and the loan amount for any instalment accounts. 
  • Status of your accounts:  Your accounts will either be listed as open or closed, foreclosed, transferred, or refinanced. Others may be listed as charged off and they may be considered delinquent. 
  • Account opening and closing dates

Even after you’ve closed an account or paid off a loan, accounts will continue to appear on your credit history for some time. Your credit report will continue to reflect negative credit information such as late payments, charged-off loans and accounts, as well as delinquent loans, for seven years. After 10 years, accounts that are currently in good standing will no longer appear on your credit report.

Pay attention to all account details, especially the payment history.

Make sure that the account number, account name, balance amount, payment history, payment due date, and payment status are all correct by carefully scrutinizing your credit history. It’s important to make sure the account’s current credit limits or original loan amounts are correct. If the credit limit listed is lower than the one you actually have, it may negatively affect your credit utilization, which in turn impacts your credit score.

The following are other potential errors to look out for in this section:

  • Accounts reported as delinquent, but they’re actually open accounts. 
  • Closed accounts that are listed as open. 
  • Good standing accounts were erroneously reported as delinquent. 
  • Wrong dates: Opened/closed account dates, payment dates or dates for delinquent payments. 
  • Accounts where you’re an authorized user but you’re listed as the owner. 
  • An account listed multiple times under different creditors. This mostly happens with collections or delinquent accounts. 

Every account listed must be yours. If you don’t recognize an issuer, find an account that you didn’t open, see an incorrect balance, or notice another problem, you should dispute the error. Inaccurate account information could be a sign of identity theft, as well as outdated information on a credit report.

4. Public records

These are debts included in your report. A chapter 7 bankruptcy will remain on your credit report for 10 years. Records such as bankruptcies, foreclosures, and repossessions will be on your report for seven years. These events can negatively impact your credit standing, as they demonstrate a serious pattern of delinquency. Arrests, lawsuits, divorces, and law-unrelated infractions are not included in this section.

Public records can have a detrimental effect on your future financial well-being.

If there is a negative item on your credit report, you may need to submit a credit report explanation to lenders to explain why it is there. A public record must be verified with a courthouse visit at least every 90 days in order to be included on your credit report. Be certain that the information is correct with respect to your name, date of birth, address, and personal information.

Tax liens no longer affect your credit, so you should not see property tax liens, income tax liens, federal and state tax liens, or civil judgments on your report. If an error is found on your credit report, you should dispute it with the credit bureaus.

  1. Credit inquiries

Credit inquiries show a record of who has access to your information and when they accessed it. There are two types of credit inquiries: hard and soft inquiries.

  • Soft inquiry: When you check your own credit or when creditors and other companies check your account. 
  • Hard inquiry: When lenders check your account when you’re applying for new loans, credit cards, credit card limits increase, or when a collection agency wants to contact you. 

A hard inquiry typically reduces your credit score by a few points, but soft inquiries do not. Lenders worry about increased risk when they see you requesting more credit because it may signal riskier behavior.

A hard credit inquiry can lower your credit score or signal identity theft.

An unfamiliar credit inquiry on your report may indicate identity theft, but it might also be the result of multiple potential lenders pulling your report after you apply for a loan or mortgage. Issuers, on the other hand, typically count close-timed inquiries as a single inquiry if they occur within a certain time frame (usually 45 days or less).

Make sure to delete all inquiries listed after two years, as they should be. You may file a dispute and request a hard inquiry removal if necessary.

Importance of Credit Reports

Your credit report is a critical indicator of your financial well-being. Credit can either make or break your chances of getting a mortgage, as well as influence what sort of credit cards, insurance, and interest rates you are eligible for.

Landlords are more likely to rent you an apartment if you have good credit. Banks and lenders are also more likely to say yes to your credit applications, and you can receive lower interest rates or better credit terms, such as a low-cost fixed-rate mortgage or a higher credit line on a credit card.

You may not be able to acquire the most effective credit cards if you have bad credit, and you may have higher insurance costs and interest rates. You might be denied a rental, have to make a bigger advance payment, or co-sign with a creditworthy individual if you have bad credit scores. It might even influence your love life, according to a poll by Bankrate.

Checking your credit report can help you understand where you stand so you can improve your credit score. Checking your credit report at least once a year can also help you correct any errors so that your credit report accurately reflects your financial situation.

Dispute the Errors

Incorrect or out-of-date information on one of your credit reports can be corrected by filing a dispute with the credit bureau or hiring a credit repair company to do the heavy lifting for you. It is crucial to detect any mistakes, as incorrect information can negatively impact your credit score as well as any applications that rely on your credit report.

Check your credit report

It is important to check your credit report for mistakes that could damage your credit rating or indicate identity theft. The following are examples of potential errors:

  • Wrong addresses
  • Accounts and account numbers you don’t know
  • Wrong account status

Disputes are evaluated on a case-by-case basis, so you must provide documentation to support your claim. You must provide proof of your identity, including your Social Security number, birth date, and a photocopy of your ID (such as your driver’s license or passport). You may need to send copies of documents to support your contention, which may include bank and credit card statements, loans, or death certificates, depending on the specific error.

Challenge the mistakes on credit reports

You can easily submit a complaint online or via mail or phone to Equifax, TransUnion, and Experian. Here are their addresses. 

  • Equifax: Report your complaints online or by mail to Equifax Information Services, LLC, P.O. Box 740256, Atlanta, GA 30374-0256. Dispute over the phone at (866) 349-5191.
  • Experian: Report your dispute information online or over the phone using the toll-free number included on your credit report. If you want to use mail, send it to Experian, P.O. Box 4500, Allen, TX 75013.
  • TransUnion: Call the toll-free number (800) 916-8800, online or by mail to TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA, 19016-2000. Ensure you’ve filled in the request form on the website.

Review the credit bureau’s response

You have 30 days to have any errors, omissions, or unverifiable information on your credit report corrected or deleted. However, due to the COVID-19 epidemic, the Consumer Financial Protection Bureau extended the deadline to 45 days as of April 2020.

Bottom Line

It’s important to understand how to read your credit report so you can improve your credit and maintain a healthy credit score. Your credit reports should be monitored regularly to prevent identity theft and fraud. When you understand why it’s important to check your credit report and how to read one, you can make more intelligent purchasing and borrowing decisions.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

Credit Repair: The Ultimate Guide to Fixing Your Credit Yourself

The act of fixing your poor credit standing is referred to as credit repair. Your credit position can deteriorate due to a number of factors Repairing it can be as simple as making a call and disputing some mistaken information, or it can be labor intensive. That’s why it’s crucial to take some steps to have a good credit standing before everything falls apart. 

But if your credit score is already down the drain, don’t worry—there are ways to get it back on track. It can be labor-intensive and time-consuming to repair your credit yourself, which is why credit repair companies come in handy.  Credit repair services from these firms can assist you in disputing inaccurate information on your credit report with credit reporting agencies. 

These companies are transparent in what they do and they are professionals who understand how to raise your score again. Credit repair companies usually charge a monthly fee for work performed in the previous month or a flat fee for each item removed from your report. 

How to Repair Your Credit

Whether handling it on your own or working with a credit repair firm, to increase your credit score, you must take gradual steps to improve your credit history. There is no quick fix for your credit. Collection accounts, charge-offs, and missed payments will remain on your credit reports for seven to 10 years unless they are updated. However, you can build a more positive credit history by taking incremental steps over time.

1. Check Your Credit Report 

To learn more about your credit score and what lenders see when they look at yours, check your report and learn how to read it. There are companies that give you free credit score reports. With it, you’ll be able to see the highest risk factors that adversely affect your scores and make improvements to them. You can report incorrect information to a credit reporting agency if you find it. You should also contact the lender that reported the incorrect information and ask them to fix it.

2. Improve Your Payment History

FICO® score models are based on your financial history. The most significant component is your payment history. Late and missed payments will lower your credit scores, and bankruptcy and debt collection can cause significant damage. Your credit reports and scores will remain impacted for seven to 10 years after this negative information is recorded.

Your credit scores take into account the size of your debt and the time of your payments. Your score will be worse if your debts are large and your payments are late. Always make sure to pay your bills on time and keep them current to improve your credit scores.

3. Get Additional Credit Assistance

Consider consolidating your debt via a personal loan or balance transfer credit card if your debt is manageable.

If you can qualify and stick to the program terms, a debt consolidation loan might provide lower interest rates and reduced monthly payments. With a balance transfer card, you may be able to get an introductory 0% APR promotion, during which you can pay down the balance interest-free. Just be mindful not to continue charging on the original card once the balance is transferred.

Seeking the help of a reputable credit repair agency may be beneficial if your debt feels overwhelming and your credit isn’t good enough to get a balance transfer card or a low-interest personal loan. You can get a consultation with personalized advice for your situation.

You can also work with credit counselors to develop a debt management plan (DMP) for unsecured debt like credit cards. You’ll make your monthly payments to the credit counseling agency, and it will distribute the funds to your creditors. You might also be able to negotiate lower monthly payments and interest rates with the agency. If you use a DMP, your credit history will not be adversely affected as long as you continue to make payments on time as agreed to under the new terms.

4. Keep Tabs on Your Credit Utilization Ratio

Credit scoring models usually take into account your credit utilization ratio, or how much you owe compared to how much credit you have available overall. To find out your utilization percentage, multiply your revolving debt (such as your credit card balances) by 100 and then divide by your total credit (all of your credit limits). For example, if you have $6,000 in debt and $60,000 in credit across all of your accounts, your utilization percentage is 10%.

Keeping your credit utilization ratio below 30% is a good idea, but you should have a rule of thumb—the lower the ratio, the better. There are several ways to lower your credit utilization rate:

  • Pay off your account balances. 
  • Increase your available credit. You can do this by asking for a credit limit increase on your current card or opening a new credit card account. 
  • Take a personal loan to consolidate your credit card debt as it’s not included in the calculation of the credit utilization rate. 

Increasing your credit limit might look like a great option, but it could end up costing you more money. Trying to open a new credit card might tempt you to spend more, which might take you deeper into debt. In addition, if you apply for a new credit card, a creditor’s hard inquiry might temporarily reduce your credit score by a few points.

Getting a personal loan to consolidate your debt can result in a zero utilization rate immediately, but obtaining an acceptable interest rate can be tough if your credit score is poor. As it is, paying down your balances might be the most effective method to boost your credit utilization rate and, consequently, your credit scores.

5. Check the Number of Credit Accounts You Have

Your score takes into account how much you owe across the many accounts you own, and what proportion of those accounts are involved in your debt. It might be advantageous to pay down some of your accounts if you can.

Closing an account that you’ve paid down to zero may adversely impact your credit score, as well as your credit utilization ratio. So keep your accounts open even after the balance is down to zero. Keeping paid-off accounts open is a plus, as those accounts are in good standing. 

6. Keep Your Credit History In Mind

Credit score modeling methods, like those used by FICO, take into account an individual’s oldest account and provide individuals with longer credit histories with a monetary advantage. Before closing a credit card account, think about your credit history. Even if you’ve paid off a credit card and don’t intend to use it, leaving it open might be a good call.

Your personal financial circumstances are unique, so you should carefully assess your situation to determine the best approach. Of course, if keeping accounts open and maintaining credit availability would lead to further spending and debt, you may choose to close them. Every individual has a different financial situation, and only you know all the details.

7. Beware of New Credit

Opening several credit accounts in a short period of time can cause lenders to perceive you as higher risk and, as a result, negatively impact your credit scores. Before signing up for a loan or opening a new credit card account, consider the consequences.

However, it’s important to understand that when looking for the best mortgage rates or buying a car, your inquiries may be aggregated and counted as one inquiry for the purposes of credit scoring. In many popular scoring procedures, recent inquiries have a greater impact than older inquiries, and they are shown on your credit report for just 24 months.

8. Once You’ve Reached Your Goal, Keep Track of Your Credit Ratings

Because you have already done the necessary work to rebuild your credit history, you might be tempted to move on and focus on something else. But it’s still a good idea to keep an eye on your credit score. Keeping tabs on your credit score can alert you to any potential problems that could make it drop again. It will also give you a heads-up if someone commits identity theft, so you can take action before it gets out of hand.

How Long Does It Take to Rebuild Credit?

It’s difficult to estimate how long it takes for someone to build back their credit score because each individual’s credit history is unique. The negative information in your credit report might influence how long it takes for you to recover, especially if it occurred a long time ago. You can speed up the process of paying down the debt, but other actions might take months to have a significant impact.

It can take up to 30 days for an investigation into your credit report to finish if you believe the information is fraudulent or inaccurate. When the credit reporting agency discovers your dispute is valid, the information will be removed from your credit report and your score will reflect the change as soon as it is calculated again.

Don’t sweat if your credit report isn’t updated right away if you’re making payments or reducing your credit card balances. It’s critical that you check your credit score regularly to keep track of your progress and make sure the right information is being reported over time. As your credit history improves, your credit scores are likely to improve, and you’ll have a better chance of qualifying for favorable credit terms when you need to borrow again.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

10 Steps to Repair Bad Credit

You might be experiencing bad credit if you’ve got an overdue student loan, a high credit card balance, a lot of overdue collections accounts, or even have been foreclosed on. Lack of good credit is a barrier to many of life’s most important milestones. You may be denied a credit card or even forced to seek assistance for an auto loan or mortgage, and the interest rates offered to you may be substantially higher.

Thankfully, a credit repair company can help you get your credit back on track. They will help you negotiate settlements with creditors, remove inaccurate information, contact collection agencies, prepare letters to credit bureaus, offer advice and support to repair your credit, and update your account. They work with credit reporting agencies on your behalf and ensure that positive changes are reflected on your credit reports. 

They are experts in credit law and well-versed in consumer protection laws and statutes such as the Fair Credit Reporting Act (FCRA), the Fair Debt Collections Practices Act (FDCPA), or the Fair Credit Billing Act (FCBA). 

Keep in mind that bad credit doesn’t have to be a permanent scar on your record. Instead, it can be a life lesson, allowing you to correct your mistakes. If you’re not interested in using a credit repair firm, you can also greatly improve your credit score on your own if you simply have the know-how, the patience, and the determination to stick to your budget. 

Here are 10 techniques for dealing with your bad credit.

1. Check Your Credit Score and Credit Reports Regularly.

To begin do-it-yourself credit repair, you must get copies of your full credit report from all three credit bureaus: TransUnion, Equifax, and Experian. Credit reports and scores are two separate (but interconnected) things.

Credit Score

Your credit score is used by many lenders to determine how much of a credit risk you are. The higher the number, the less risky you are as a borrower and the more favorable of a loan you can receive. Someone with a high credit score may be able to borrow more money and receive a lower interest rate. Your credit score is used to determine your ability to make payments and your eligibility for loans.

There are five factors that comprise your credit score, and they are weighed in different proportions when calculating the final number:

  • Payment history (35%): Always pay your loan on time for a pristine history. 
  • Credit utilization ratio (30%): Huge balances on your credit cards will hurt your score. 
  • New credit accounts (10%): You get a hard credit inquiry whenever you apply for a loan or new credit card. This lowers your score temporarily. 
  • Credit account mix(10%): Having various loan types (e.g. mortgages, auto loans, credit loans, etc.) helps you have optimal credit. 
  • Length of your credit history (15%): The longer your credit accounts have been open, the better your credit score. The longer you maintain a good credit history, the better your score.

Having a credit score above 700 lets you do pretty much anything a person with a higher score can do. Actually, if you have a higher credit score, let’s say 850,  lenders know that they are unlikely to make much money from you, so it can work against you. 

Credit Report

Your credit report shows your credit history in detail. You can check if you’ve made any loan payments late or if you’ve had any late payments in the past. It’s important to check your credit report every now and then to ensure that there isn’t an error on your account. 

You can check your credit score and credit report for free through reputable free credit score tracking apps such as Credit Karma or Credit Sesame. 

2. Dispute Any Errors You Find

The next step in credit repair is to dispute incorrect information on your credit report. While errors aren’t common, they do occur. It’s worth cleaning up any small errors you do see, but don’t try to correct accurate information.

You should also check your identity information (including your Social Security number, the spelling of your name, and address) and credit history to see if there are any problems with your credit.

Make a copy of the report and highlight the errors if you notice any on the list of credit cards, outstanding debts, or major purchases. Make copies of your bank statements next, because the credit bureaus won’t act without proof.

In the letter, notify the credit reporting agency about the error and provide a copy of the report. Share how the report is incorrect and include enough evidence to support the claim. Sending this letter by certified mail is a good idea even though some Credit Bureaus now allow you to submit disputes online.

You must send a letter to the reporting agency asking for a response within 30 days. You can always get the help of a credit repair company to straighten things out for you. 

3. Stick to a Budget and Don’t Go Beyond It

Make sure you’re not spending more than you earn, no matter how painful or scary it may be. You need a budget. This may be extra difficult (though maybe even more necessary) for people who don’t get a consistent income throughout the year. For example, if you’re a restaurant server, an Uber driver, or a freelance writer, your income may vary from month to month, so you will need to budget extra.

Review your tax returns for the past two years to get a sense of how much money you take home in a year. Subtract your regular monthly expenses from your current income to get your starting point. Next, estimate your monthly spending habits for other expenses such as gasoline, groceries, and entertainment. Create a limit, based on your income, of what you can spend in each of the different categories of expenses. Resist impulse purchases.

4. Pay Your Bills on Time

Make sure you pay all your bills on time. Missing a payment accounts for 35% of your credit score. That’s heavier than any other factor. Missing a single payment on a credit card can knock down your credit score significantly. To improve your credit score, paying your bills on time is the most important thing you can do. Even if you are only paying the minimum, your credit score will improve. 

To prevent damaging your credit score,  make as many bills as possible autopay. Even if you normally pay your bills on time, autopay is still a good safety net if you somehow forget.

Some bills might not be eligible for autopay. Make yourself a number of reminders if you fear you will forget about these. For example, you can set a mobile notification a week before the due date asking yourself to pay early—and another late notification on the due date. If you’re really concerned, put sticky notes on your bathroom mirror reminding you to pay. It is critical.

5. Pay Off/Down Credit Card Balances and Other Debts

Avoid being charged high-interest rates by paying off your credit card in full before each due date. You may not always be able to do that, but you must develop a plan to clear your debt across multiple accounts. It is not bad to focus on the debts that cost the most to pay before tackling debts that cost the least.

When you’re making no progress at all on your five credit cards draining away your bank account in the form of minimum payments and interest charges, it can feel like you’ve got nothing to show for your efforts. Prioritize paying down the smallest loan until it’s finished, then you can focus on the next smallest loan. Your debt decreasing can also help your mental state.

6. Keep Track of Your Credit Utilization Ratio.

Using more than 30% of your total credit is a bad idea. Credit utilization accounts for 30% of your credit score. In short, 30% of your credit score is based on the amount of credit you are using vis-à-vis the amount of credit that you have available to you. Consider the following example: You have a $10,000 credit line on one credit card and a $5,000 outstanding balance. In this situation, your credit utilization is 50%.

A good credit utilization ratio is 30% or less. If a lender sees you using 90% of your available credit, it may indicate financial trouble. Try to pay off as many of your large purchases as possible to prevent exceeding the 30% credit utilization threshold.

7. Don’t Close Your Old Credit Cards

Even if you don’t use a credit card, it may still be worth keeping an account. Your credit score is determined by the proportion of your debts that are currently outstanding. This is known as your credit score’s “importance factor.” The longer the average age of your debts, the better your credit rating.

For instance, if you opened your first credit card four years ago, the average length of your credit history is four years. If you open another credit card today, the average length of your credit history will be two years. And if you want to close your first card, the average length of your credit history will be one day. The accounts that you close in good standing will remain on your credit report for several years, but the impact on your credit score when the account is removed will be felt. 

Don’t just close your credit card if it no longer suits your lifestyle. Keeping it open will help preserve the average age of your loans. It’s smart to keep a credit card around if you don’t have to pay an annual fee. However, if you don’t use your card, it’s probably not a good idea. You can call your bank to switch to a no-annual-fee version of the card.

8. Ask for Help

You can get the help of a professional credit repair company to improve your credit score. Inaccurate data, blemishes, and reporting mistakes can all have a negative effect on your credit score. Also, late payments, collections accounts and charge-offs can have the same dramatic effect. A poor credit score not only affects your ability to get a loan but also get employment in some cases. A credit repair company comes in to help you get everything on track. They are skilled negotiators, who know all credit laws and can offer you ongoing support and advice.

If you must, lean on those with better credit. It still is possible for you to achieve some of the greatest milestones in life even if your credit score is holding you back. Ask family members to assist you in improving your score if you need help buying a house or car.

An authorized user card is one way to get your own good credit history on someone else’s credit report. It’s an injection of healthy credit habits into your credit score. They don’t even have to give you the authorized user card, they can just shred it and allow you to reap the benefits of their good behavior secondhand.

You may want to consider asking a relative with good credit to cosign with you if you want to get a new loan. For instance, if you want to apply for a debt-consolidation loan but are not qualified, a cosigner can help you out. In this case, if you default on the loan, the family member will be responsible for the bill.

9. Do Not Apply for New Credit Cards

Even if you were offered a sign-up bonus for a new credit card, resist the temptation to open one. Each time you ask for a new loan, the lender will scrutinize your credit to determine if you’re worthy. This is known as a “credit check.”

There are two kinds of credit checks: soft and hard credit pulls. A soft credit pull has no adverse effect on your credit score, as it’s used to pre-approve loans for any potential customers. Hard credit pulls, on the other hand, can lower your credit score temporarily. Lenders use this to decide whether they can extend the loan to you. 

Credit scores are likely to plummet dramatically if you apply for new credit too frequently, although you might see a rebound within a month or two. Frequent credit inquiries are viewed as a warning sign by lenders. They don’t want to see lots of inquiries because it can reflect that you are desperate for money.

10. Use Credit-Building Tools

To get back on track, use available credit tools to help you. There are unique ways to build your credit on the internet. You can get apps that help you build credit by offering various types of loans—each of which you pay down monthly. You’ll find some that even send you back the initial term of the loan, minus the interest rate and a small application fee, at the end of the term. 

When you make a payment each month, good behavior is reported to the Credit Bureau and your credit score and profile may improve. The initial application might lower your credit score, but if you make all payments on time (essentially to yourself), it will increase.

You can also improve your credit by obtaining a secured credit card from a bank. These cards are issued to people with poor credit because they are effectively zero risk for them. To put it simply, you hand over money to the bank and they give you a credit card with a matching credit limit. For instance, if you give the bank $2,000, you’ll receive a credit card with a $2,000 limit. Should you neglect to repay your debts, the bank will keep your money. When you graduate from a secured credit card, the bank will return your money.

Wrapping Up!

It takes tremendous willpower to climb out of debt, but you can do it. Make sure there aren’t any errors on your credit report and dispute them with the credit bureaus. Even if it’s just the minimum payment, make sure you pay all your bills on time. Starting with the smallest credit card balance, focus on eliminating credit card debt as quickly as possible. Keep your credit utilization low, and keep all your credit cards open and in a sock drawer, if you must, to remove temptation (as long as they don’t have annual fees).

There really is no quick credit fix. However, if you plan to take on a big debt or buy a new home, it’s worth the effort. You’ve also got credit repair companies like High Score Now to help you out.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this.