Many companies and unscrupulous people claim to hold the magic key to repairing bad credit overnight. The hard truth is that there isn't a magic button to raise your credit score -- it takes persistence, dedication and a little inside knowledge on the credit industry to repair your credit to a positive standing.
Pay Bills on Time
Your payment history comprises 35 percent of your credit score. Creditors report payments that are more than 30 days late to the credit bureaus, so even one late payment can lower your credit score. Routinely skipping payments will cause your credit score to plummet and remain on your report for at least seven years. You do have a second chance to fix your credit score after a history of late payments. Late payments mean less to your credit score the older they are, so start paying your bills on time each month. Over time, your positive payment history will mean more to your score than the derogatory credit history.
Negotiate With Creditors
Sometimes it's not possible to make on-time payments due to unforeseen medical expenses, unemployment and other unavoidable circumstances. If you have seriously late payments (more than 90 days) or account write-offs, it's still possible to contact your creditors and work out a payment arrangement to satisfy your obligations. Settled accounts will still show on your credit report and have an affect on your credit score, but they look better to future creditors than a series of charged-off accounts. Your satisfied debts will age over time and mean less to your overall score. An added credit bonus to settling your accounts is that debt buyers won't be able to get a hold of your debt, add additional negative marks to your credit report and harass you for the debt.
Dispute Inaccuracies on Credit Report
The Fair Credit Reporting Act requires access to a free annual copy of your credit report from each of the credit bureaus (TransUnion, Equifax and Experian.) It's important to take advantage of this offer to check the accuracy of the information. Identity theft is a growing crime and you may be a victim and not even know it. Go over your credit reports and verify that the information listed -- accounts, amounts owed, addresses, etc. -- is accurate. If you find discrepancies, file disputes with the credit bureau that lists the inaccurate information -- each credit bureau offers sample dispute letters on their websites. The U.S. Federal Trade Commission also offers detailed advice on their website on how to properly and legally dispute inaccurate information on credit reports.
Ask for a Goodwill Adjustment
Late payments happen from time to time. If you only have one or two, you may be able to ask the creditor for a goodwill adjustment on your credit report -- meaning they will remove the late payment from your account. You will need to submit a letter in writing sent certified with a return-receipt because you want to have that agreement in writing. There's no guarantee your creditor will agree, but even removing one late payment can improve your credit in the short term.
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