Do-it-Yourself Elimination of Bad Credit Scores

Credit repair is one of the few projects that make sense to do on your own. Companies or credit repair clinics are an unnecessary expense. Also, by rebuilding a credit history on your own, you gain more experience managing credit, which can lead to a higher score in the future. Rebuilding a credit score is possible; there are no secret tips, just the need to act like a responsible borrower.

Check Your Credit Report

Pull your report to find out the cause of your poor score. Your report lists all negatives. If you have missed payments, consider automatic bill pay. You cannot eliminate the history of delinquent accounts, but you can build good history by becoming current on them.

Fix Any Credit Report Errors

Your credit report probably has at least one error it. Most errors are fairly inconsequential, such as an incorrect mailing address, but one in four reports contains a serious error that drags down your score, such as a charge-off that belongs to someone else. If you see anything wrong, dispute it immediately. Even a small error could cost you a loan when it paints you in a negative light, such as a report that does not contain a current employer.

Use Credit Responsibly

Do not stop using credit; this would probably lower your score. The FICO formula likes to see borrowers who use several accounts at once, not those who cancel all but one account. Consider a new credit card account to build good history without tacking on more debt. Retail accounts usually have the lowest credit requirement, but secured cards are even easier to obtain, because you place collateral on the limit.

Follow a Budget

People with bad credit scores tend to carry a lot of debt. Go over your budget and trim as much frivolous spending as possible, such as eating at restaurants, enjoying nights out or any other nonessential. Create a budget that pays down your debt as fast as possible.

Tip

Make sure all current and future lenders report to the three major credit bureaus. If a current lender does not report to all three, there is nothing you can do except move your account to a creditor who will report your good payment history.