While we cannot guarantee that you will see a 100 point increase in your credit score, we can only estimate results based on our experience guiding our clients through this very process. Everyone’s credit file is different and as such, your results may vary. We hope this list helps you gain a better understanding of credit and helps you to achieve your financial goals.
Credit, it can be intimidating to try to understand and with so many variables at play, it’s no wonder so many people don’t even bother to deal with it. But, believe it or not, you have the ability to improve your score by 100 points or more all on your own.
Based on a 2013 study conducted by the Fair Isaac Corporation as many as 32% of Americans have credit scores under 650. That’s 77.8 million Americans!
We offer a completely free guide to help you get a jump start on your credit repair journey. It is packed with helpful dispute letter templates, tactics to dispute bankruptcies, judgements, and verification request templates. If you have any questions, please feel free to contact us via Facebook Messenger!
Now let’s get started on improving your credit. Here are the 5 steps:
- Complete a thorough review of your credit report. You are legally allowed a free copy of your report from each bureau once a year. Go to AnnualCreditReport.com to download your copy.
- Look for inaccuracies in balances, payment history, questionable collections and any possible fraudulent accounts. If you do have any fraudulent items, then you might be asked to file a police report along with your dispute. Always make copies of your letters and send them via regular US mail (we do not recommend disputing items online).
- Make sure all of your information is reporting accurately. Even the smallest mistake can alter your scores. Check the spelling of your name, your address, account history, payment history, balance reporting, every detail.
- Dispute any errors, inaccurate, and/or unverified information with the bureaus and creditors.
- Maintain a folder with all correspondence that you receive from your disputes and remember to reply to those correspondences within 30 days as needed.
- Sign up for credit monitoring service and keep an eye out for changes. Credit Karma is acceptable if you’re on a budget. But if you can spare to invest in a quality credit monitoring service, then we recommend that you sign up for one. Privacy Guard is one we suggest (please note that we do not receive any compensation from Privacy Guard for recommending their service).
2. Start building credit. Building a positive credit history is crucial in improving your profile. If you don’t have any credit cards, then this is a great place to start.
- Thoroughly research different secured cards and apply for the best one that meets your needs. We recommend to start with a minimum of $300 in secured credit.
- Always keep your balances under 30% of the limit and maintain a low balance. Don’t fall into the myth that paying your cards in full each month will benefit your scores. One of financial lenders’ best kept secrets is that they prefer to see some type of balance history from month to month.
- Use your secured card for gas, your Netflix subscription, or occasionally for lunch. The idea is to use it for small transactions that you can easily manage while keeping the balance under 30% of your limit.
- Use auto-pay to pay the minimum every month and your scores should continue to improve with healthy, responsible activity.
3. Pay down balances. If you currently have credit cards and are using more than 30% of your limit then you want to follow this portion of this guide. Pay down high balances that put you over the 30% rule. Stay under 30% and maintain a low balance as mentioned previously. This factor alone is the second biggest impact to your score at a whopping 30% of your score.
4. Refrain from running your credit. Every inquiry affects your score. The less inquiries you have, the better. When you apply for credit frequently you are telling potential lenders and/or employers that you may be in financial distress and they may review your profile as a higher risk.
5. Maintain a good payment history going forward. It is extremely important to pay your bills on time. This affects 35% of your score! Pay on time, all of the time. Your credit scores can be significantly impacted with just one late payment reported to your credit file. One of our favorite free apps to manage your bills and set budgets is Mint (we also do not receive compensation for recommending their app).
With some time, dedication, and persistence you can turn your scores around and better your financial health. We highly recommend dedicating at least six months worth of effort to maximize your results. This may not be an easy process and you may not always receive the response from your disputes that you wanted. Don’t get discouraged. Persevere through the dispute process while practicing healthy credit building habits and you’ll be closer to better credit it no time.
If this guide was helpful, please feel free to share it with your family and friends. We wish you the best of luck!