Can You Really Repair Your Credit?

When it comes to credit mistakes, such as bankruptcies, missed payments and accounts in collection, nothing is forever. However, companies promising quick credit repair are unlikely to deliver through legal methods. There are many things you can do to repair your credit mistakes, but they take time and effort on your part.

Correct Credit Report

The only way an event or action affects your credit score is if it appears on your credit report. Therefore, the first place to focus when repairing your credit is your report itself. Every piece of information on the report should be accurate. Mistakes could be dragging your score down. If you find inaccurate information, such as an account listed with a balance past due when it was really included in your bankruptcy last year, dispute it with the credit bureau that provided the report. You can write a dispute letter, call the credit bureau or file a dispute online.

Pay On Time

One of the best things you can do to repair your credit once your report is accurate is to pay all of your bills on time. Your payment history is the most important factor used to calculate your credit score, so cleaning up your act in this area can have a significant impact. To pay your bills on time, you will not only need to remember when each bill is due, but you also need to have the money to pay it at that time. Create a household budget and set aside money from your paychecks to cover all of your bills before you spend on luxury items.

Reduce Debt

Reducing your debt is easier said than done, especially if you are on a tight budget, but you cannot have a good credit score when your credit cards are all maxed out and you are applying for new credit all the time to make ends meet. At first, just focus on spending with cash or debit rather than credit so you do not increase your amount of debt. After you can cover all of your monthly expenses and debt payments, decrease your expenses further so you can make extra payments on your debts with the highest interest rate. Ideally, you should never use more than 30 percent of your available credit line on any credit card.

Warning

Many credit repair companies aid customers in using fraudulent methods to repair their credit. Examples of fraud include misrepresenting information, obtaining an Employer Identification Number as an individual to avoid using your Social Security number to apply for credit, and applying for credit with another person's name and Social Security number. You could be prosecuted for these actions, even if a credit repair company advised you to do them.