How to Repair Your Credit

An Easy, Step-by-Step Credit Repair Guide for Beginners

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Before You Start, Learn What Is Your Credit Score and Why Credit Matters

Steven Millstein
Steven Millstein, Founder of CreditRepairExpert.org

Repairing one’s credit history and learning how to manage a good credit status are critical financial steps to creating a solid financial portfolio. We pride ourselves on the best possible credit repair advice on the web.  They will also provide quick, efficient ways for consumers to repair their damaged credit and also learn a little more about staying out of the bad credit category.

A consumer’s major reason to clean up their credit usually comes when they have been turned down for one of the many kinds of financial help; loans, leases, mortgages…etc. That is not the way a smart credit consumer should be going about his financial business.  Instead, consumers should be aware and knowledgeable about their credit history and what their current credit status is.  That is what we created this website for.  We want to provide you with top-notch credit repair help along with sharing our knowledge of helpful credit repair tips and credit managing advice.

Consumer credit is commonplace these days and many people that some form of credit card or credit-based spending material.  Since the standard of living is higher then it was years ago, it is almost impossible to buy certain needs, such as a house or a car, without a financial loan or lease.  However, not just anyone can receive a loan or a lease.  How lenders determine if you are qualified to receive a loan or lease from them is by checking the customer’s credit score.  If their credit score is good they will probably front the customer the money, but if it is bad the customer has a slimmer chance of receiving the loan they wanted or needed.   As you can see now how important your credit is and how crucial your credit repair journey will be.

This website is composed of qualified professional credit advice and it is our sole priority is to help you restore your credit and to teach our expertise to others. By continually improving consumer’s credit repair methods, we have created a very effective credit recovery program and this not only fast and easy. This credit repair strategy is guaranteed to give people the credit repair help they have needed.

Credit scores are not something that should be ignored nor neglected in today’s world. Consumer’s credit scores can affect more than just consumer’s interest rates, but credit can also ruin their chances of qualifying for loans, employment, home rental, leases, financial opportunities and possibly insurance premiums. It is important for consumers to be aggressive about their credit and fix their credit problems before they are denied. We understand the concern for this issue and will provide them with the necessary materials to help lift their credit into a long healthy credit future.

After repairing past credit errors, it is imperative to learn how to manage one’s credit efficiently and wisely. Jumping blindly back into the credit game without a heads up on what went wrong the first time will only bring the situation around full circle. Consumers can find the most professional credit repair help today. We will help control consumers’ credit for the future.

Ready to start improving your credit score today? Let’s get started…

P.S. if you get stuck using this guide (which can happen), please don’t hesitate to contact us – we’ll help you. you can also work with a credit repair company that will undertake the required work on your behalf. 

While most of us have heard of the term ‘credit score’ before, far fewer of us know what it actually means. A credit score is simply a number representing the creditworthiness of any particular person. This score is given on a credit report by a credit bureau.

Why is your credit score important? It’s important because lenders, including credit card companies, banks, and car dealerships, will use your credit score to evaluate the potential risk that you are giving them when you borrow money from them.

In other words, based solely on your credit score, a lender will be able to determine if you qualify for a loan, the limits of that loan, and your interest rate. If you have a poor credit score, they will more than likely simply choose not to lend you money, period.

This is why it is vitally important to boost your overall credit score in any way possible. Everyone from insurance companies to mobile phone companies to government departments to landlords will request your credit score before deciding to do business with you. To put this more simply, your life will just be a lot simpler with a higher
credit score.

But there’s no need to worry because this blog is going to teach you everything you need to know about what you can do to raise your credit score by walking you through a proven ten-step process. We’ll discuss what your credit score is in more depth.

While we already defined what a credit score is in the introduction, we’re going to discuss it more in-depth now.

A credit score will fall along a scale from 300 to 850. The closer your score is to that 850, the more appealing you will look to creditors and lenders.

Remember that your credit score doesn’t just determine whether a lender or creditor will do business with you. It also determines the limits of your loan and the total amount of interest you’ll have to pay. You want your credit score to be as high as possible. It’s really as simple as that.

What Exactly Determines Your Credit Score?

So, how is your credit score calculated? It’s calculated based on the figures in your credit report that compile your credit activity from the three primary credit agencies: TransUnion, Equifax, and Experian.

Credit Bureaus

These three agencies will determine whether you have bad, fair, good, or excellent credit according to this scale:

  • 720 to 850: Excellent Credit
  • 60 to 719: Good Credit
  • 630 to 689: Fair Credit
  • 300 to 629: Bad Credit

There are a variety of factors that will determine where your credit falls on this score, including the following:

  • Your record of payments that were made on-time
  • The age of your credit history
  • The balances you owe on your credit
  • The type of credit you’re using
  • How much credit you have applied for recently

Therefore, to build a good credit score, you need to do the following:

  • Pay each of your bills on time (not just your credit card bills)
  • Keep the balance on your credit cards at 30% of your total available credit
  • Regularly’ check your credit score and see if there are any errors or mistakes that you could challenge
  • Don’t apply for multiple credit cards in a short period of time

Take note that a credit score does not mean you are doing good or bad financially, contrary to what many people think. It’s possible to owe a lot of debt and still have a decent credit score or to have plenty of money and have a poor credit score.

In addition, a good or bad credit score also won’t hurt your job prospects. This is because potential employers will not check your credit score when you apply to work for them.

Credit Score Range

What If You Don’t Have a Credit Score?

If you lack a credit score, you will be someone who is called ‘credit invisible.’ However, you can only not have a credit score if you’ve never had a credit card or a ball of any kind (so if you’ve purchased a car, for instance, you more than likely have a credit score because you’re making monthly payments on the car).

However, just because you don’t have a credit score does not necessarily mean that you won’t have a Vantage Score, which looks at alternate data such as utility payments or rent for the past two years.

Next, let’s check out how you can check your credit report.

Checking Your Credit Report

Have you requested your free animal credit report recently? If not, you’re in the same camp as most people. However, checking your credit report regularly is also something that you want to be doing. It’s very sad that most people don’t, but it’s also something that is very easily fixable.

  • At the bare minimum, you will want to check your credit report at least once every year. There are a wide variety of reasons for why you should do so, including:
  • It’s a critical step towards building and maintaining a good credit score
  • It should be treated as something that you do regularly when managing your finances; just as you check your credit card bills and bank statements, you should also review your credit score to see where you stand
  • Managing your credit, which you can only do if you are aware of your credit score, is something you must do in order to be financially successful
  • If you believe that you may have been an identity theft victim or a fraud victim, your credit score will usually be the first indicator

Credit Report

How Can You Check Your Score?

As mentioned before, it is very easy to check your credit score. What you need to do is go directly to the FICO website, which will develop the FICO score that most lenders use.

FICO scores will be used by lenders and creditors that offer instant approval. In other words, it is the most universal credit score there is.

What you can do is purchase a credit report from any of the three primary credit bureaus, which, as mentioned before, are TransUnion, Experian, and Equifax. There are purchasing options clearly available on each of their websites.

You will need to give your personal identification information, of course, before you gain access to your credit score. There will be questions given to you that only you know the answers to, such as your Social Security number and what your vehicle or mortgage payment is.

If interested, you can also purchase a credit card monitoring service to monitor all activity on your credit report over one month. A monthly fee will be charged to you and your credit score will be provided. This will be helpful to you if you have been an identity theft victim in the past.

Even though you now know what a credit score is and how you can check your score, you may not yet be convinced that improving your credit score is something you need to do.

While most of us have heard of the term ‘credit score’ before, far fewer of us know what it actually means.

The Secrets of a Credit Score

Ultimately, your credit score is a reflection of the credit bureaus’ trust in you to repay future debts. The lower the score, the higher the risk in their estimation. In turn, a high score indicates that they believe you are a less risky borrower. In one sentence, the credit score is the predictor of how likely the credit bureaus think you will repay a loan or debt.

Are there different Credit Scores and what are they called?

This is becoming a more complicated question every year. In the past, there was one score: the FICO score (FICO is an American credit score company based in San Jose, California that has been producing credit scores since 1958). However, as there became an increase in public awareness of the scores, and therefore an increase in the number of people willing to pay to know their scores, the credit bureaus began producing their own independent scores (which of course, they charged you for) under several different names. Even FICO now has several different types of scores. To make it more confusing, the credit bureaus started a competing credit score called VantageScore. All of this can seem a chaotic environment for anyone wanting to simply know their score.

The good news is that it really is simpler than the credit agencies want you to believe. In spite of the jargon and frequent name changes for marketing purposes, they all use a similar formula and the variances in the scores are mostly based on their databases containing differently reported information.

Because of this, our best advice is to check your scores regularly but don’t get bogged down or focus too much on all the different score names. It is good to know them, but if you track them, be sure you are tracking the same reports each time. In other words, if you get a score from TransUmon every six months always compare it to prior TransUnion.scores. Don’t try to compare a TransUnion score to a prior Experian score or a prior Equifax calculated score.

For the purpose of this blog, when the term “credit score” is used, the information pertains to both FICO and VantageScore.

What is a FICO Score?

There are several types of FICO scores such as for installment loans, auto loans, and others. The most common one is the “classic” or generic score. The classic score is generally between 300 and 850. In the last published year, the average FICO score was 689.

What is a VantageScore?

The three credit agencies TransUnion, Experian, and Equifax banded together to offer this alternative to the FICO score. The VantageScore 3.0 range was changed in 2013 to 300-850. Even though the same formula is used across all three credit bureaus, the VantageScore will vary between them since the information in their databases varies.

The credit bureaus currently use or have in the past used, a variety of names for their scores including FICO Advanced Risk Score, the Beacon score, Score Power, Pinnacle, FICO Risk Score NextGen, Percussion, and EMPIRICA. I would suggest you only focus on the FICO score and/or the VantageScore. Keep it simple.

How is your credit score calculated?

Your credit score is derived from a mathematical formula that analyzes all the data in your credit file. While it varies a little between the different credit reporting companies, the basic rules are the same. Some of the major factors that go into the algorithm to determine your score include things like debt level, credit history, and payment behavior. There IS no consistent way in which they are measured since the weight of each is dependent on all the other credit factors available. This makes it very difficult, if not impossible, to calculate how any one action will affect your credit score. Factors like ethnicity, religion, and gender are not taken into consideration.

What Are The Largest Factors In Determining Your FICO Score?

  • Payment History: paying bills on-time over a period of time will improve the score. Missing payments will lower the score. Creditors typically update your payment information every 30 days. Payments on the following will affect your payment and credit history: credit cards, retail store credit, finance company and bank loans (such as car loans), and mortgages. Payment history is typically worth about 35% of your FICO
    credit score.
  • Outstanding Debt: The bureaus look at how much debt you have in relation to how much credit you have (your credit limits). The debt can include a mortgage, credit cards, student loans and any other type of debt. Generally, lenders prefer your debt to be at 35% or less of your credit limits. An easier way to look at it is the percentage of credit used (credit utilization) compared to the total credit available. High balances on several accounts may be viewed by creditors as leading to future problems in making payments. Lenders also compare the current balances to the original balances. The more that has been paid off, the better. Outstanding debt is typically worth about 30% of your FICO credit score.
  • Credit Account History: A long-established credit history will have a big impact on delivering a good credit score. Credit history is typically worth about 15% of your credit score.
  • Recent Inquiries: Applying for too much credit or too frequently will show up on your credit report. Too many inquiries or too many new accounts may be interpreted as you are taking on more debt than you can afford which, will negatively affect your credit score. This is especially true if you have a short credit history. Recent inquiries are typically worth about 10% of your credit score.
  • Types of Credit: the credit bureaus like to see a balanced mix of accounts, both in number and types, and in credit and loans. This is particularly true if you have a short credit history because there is less information used to calculate your score. Types of credit are typically worth about 10% of your credit score.
  • Negative Information: obviously little to no negative information on your credit report is a good thing. But the number of and seriousness of negative items such as collections, tax liens, and bankruptcies will affect the score.

Credit Score Factors

What Are The Largest Factors In Determining Your VantageScore?

In general, the following have the largest factors in determining your VantageScore:

Recent Credit: Too many new accounts and inquiries may be an indication that you are applying for more credit than you can handle. Recent credit is typically worth about 30% of your VantageScore.

Payment History: Paying on time over a period of time indicates a pattern of responsibility. Missing payments does the opposite. Payment history is typically worth about 28% of your VantageScore.

Credit Utilization: How much credit is available and the debt-to-credit ration. Credit utilization is typically worth about 23% of your VantageScore.

Depth Of Credit: length of credit history and the types of credit you have had in that time period. Depth of credit is typically worth about 9% of your VantageScore.

Credit Balances: What your total debt is. Credit balances are typically worth about 9% of your VantageScore.

Available Credit: How much credit you have access to. Available credit is typically worth about 1% of your VantageScore.

What Makes The Credit Score Rise And Fall? Here is an example of how it works:

  1. You apply for a credit card.
  2. The company that offered the credit card (the creditor) requests your credit report from one of the three credit bureaus.
  3. The creditor then reviews the credit report and the other information you provided (such as income) in the application. It uses this information to determine if it will give the credit card, and if approved, the interest rate it will offer.
  4. After approval, the creditor will report your new account to the credit bureaus. From that point on, about every 30 days the creditor will update your record With balance and payment activity.
  5. As you use the credit card and make timely payments every month, your credit score will continue going up over time. However, if you miss a payment(s), it will negatively affect your credit status and your score will drop. So your credit score changes With your financial activity.

How Long Does Information Stay On The Credit Report?

Depending on the type of information, the length of reported activity can range from 2 -10 years.

Here are a few examples:

  • Hard inquiries from applying for credit – 2 years
  • Late payments, collections, charge-offs, civil judgments, closed accounts – 7 years
  • Bankruptcy and foreclosure 7-10 years
  • Tax liens — indefinite

On the flip side, positive information will also stay on your record for lengthy times as well.

Fortunately, for the negative types of information, there are ways to dispute these and we address them late in a future blog post on The Powerful Dispute Process.

What Is A Good Score?

The answer to this question is really dependent on the type of loan you are seeking and what the creditor has determined is a good score for their financial product. Generally speaking, the scores range from about 300-900. The higher the score, the better chance you have to be approved at the best rates. Also, a high score provides some bulletproofing should a negative item find its way to your credit report. Our recommendation is that you check your score at least twice a year. Your goal is to see a higher score every time you check. If you want to set a goal, I recommend shooting for above 750 and keeping it there, but again, higher is always better.

Credit Score Myth Buster

Co-signing doesn’t mean you’re responsible for the account.  Co-signing or opening an account jointly makes both parties legally responsible and any activity on the account will show on the credit reports of both account holders. So for example, you co-sign for a relative’s or friend’s car loan, and they do not make the payments, your credit status will be affected negatively. It can be hard to stop this arrangement too. You would have to get the other party to refinance the loan (assuming they can do so) or talk the creditor into formally taking you off the account (which is unlikely if the other person stopped making payments).

Improving & Maintaining Your Credit Score

Using Section 609 as a basis for improving your credit score is a great choice, but that doesn’t mean you’re free and clear for the rest of your life. You still need to constantly be aware of your credit score situation and work hard to maintain and further improve your credit scores. The following outlines some effective tips on how to maintain good credit and potentially even improve your credit score.

Five Practical Tips to Build a Better Credit Score

  1. Dispute any existing errors. If there are any errors or inaccuracies on your credit score, you don’t always have to go to the lengths of writing a letter and quoting Section 609. You can talk to the parties involved and try to get it figured out. For example, if you have an outstanding medical bill from an urgent care facility that you were under the impression your insurance company would cover, contact your insurance company to have it addressed. The unpaid bill is likely affecting your credit score.
  2. Limit the number of inquiries. Too many inquiries into your credit can hurt your credit, so limit how often you reach out to potential lenders. In other words, limit how many credit products you apply for.
  3. Don’t wait to pay. You don’t have to wait for your credit card bill to come around once a month in order to pay your bills. You always have the option to pay earlier in the month, or even several times a month, if you have larger purchases and want to keep your balance down.
  4. Apply for a credit limit increase. You’ve probably heard that it’s best to stay under 50% of your credit limit on all cards, sometimes even below 30%. If you have some expensive purchases coming up, or you simply require more charges to be put on your credit card, talk to your credit card company about an increased credit card maximum to keep your percentage in check.
  5. Focus more on getting rid of new debt. Far too many people focus their energy on trying to erase debt from years ago. This can be seen as good debt, as it shows that you paid it off consistently over time if that is the case. Newer debt has more of an impact on your credit score, so make getting rid of that debt your primary focus.

Maintaining a good credit score is extremely important, so don’t discount the ability of any one of these methods to have an impact on your credit score. Credit scores are more of a big picture, so small steps toward a better credit score really do add up. While Section 609 might be a great loophole, it isn’t a permanent cure-all. Follow these tips to ensure that all debt and bad credit decisions are in the past and that a solid credit score is in your future.

Credit scores have a bigger impact on everyday life than most people realize. Your credit can affect your financial decisions and opportunities, from buying a new car to renting the apartment you want, to taking out a loan, to increasing (or decreasing) the amount you pay for security deposits. Bad credit can and will follow you eve everywhere.

If your credit score is causing you problems, take a look at Section 609 of the Fair Credit Reporting Act and consider writing a dispute letter to the collection agency. Dispute letters commonly work to the writer’s advantage, so there is no harm in trying to get negative items removed from your credit report. This strategy could potentially help you clean up your credit quickly, paving the way for you to get your finances back on track.

Whether or not you follow through with this dispute, there are many other methods you can and should use in order to maintain and increase your credit score. Always remember to watch your spending, pay your bills on time, and fight any errors that may be reflected in your credit score. Your credit score is a reflection of your creditworthiness, so make sure it’s strong.

Ultimately, good credit can help you out in life, and this is not something to ignore. Take the steps to repair and strengthen your credit, and you’ll soon reap the rewards.