How to Raise Your Credit Score and Repair Bad Credit for Free

Your credit score is more than just a number. Even if you are not applying for a line of credit, a bad credit score can haunt you. Employers and insurance companies often require credit checks. A good credit score proves you are reliable enough to pay back borrowed money. Poor credit indicates a risk for lenders. It is never too late to improve your score, and you can do so free of charge. Consistency is key.

Instructions

Fix Your Credit Report

1

Obtain a copy of your credit report. The Federal Trade Commission recommends consumers visit annualcreditreport.com to request a credit report from Experian, Equifax and Trans Union. Your credit score is not included in the free report. You can pay extra to receive your score, but it is not necessary. You can still use the information in your free credit report to boost your score.

2

Identify errors or discrepancies of your credit report. Look for any accounts you do not recognize or have paid off. Check the amount of the account balances to ensure they correspond to what you have in your records. Some debt might even appear multiple times if it was sold to different collection agencies.

3

Dispute any information that is not correct. If you see debts that are not yours, contact each credit bureau to launch an investigation. If the creditor does not provide sufficient evidence that you owe the debt, it is deleted from your report. If you notice account balances that are incorrect, contact the creditors directly to have them correct the errors.

Repair Your Credit Score

4

Catch up on any late payments or old bills. You need to get current on all debts and bills to repair your credit score.

5

Pay down the balances on credit cards you have. Avoid using these cards until you have your credit utilization rate below 30 percent. For example, if you have a credit card with a $1,000 credit limit, you should keep the balance below $300. To improve your score, apply extra money towards your credit card bill each month. The lower your balances, the higher the credit utilization rate. Your debt to credit limit ratio is 30 percent of your credit score. If you tend to use one card often, try dividing your spending among different cards.

6

Open a new account to establish or rebuild credit. One of the fastest ways to rebuild credit is by using a credit card responsibly. Prove your ability to control your spending and pay off the debt as agreed. Credit cards are available regardless of your credit score or history. For example, you can get a secured credit card as long as you supply a cash collateral deposit that works as a kind of credit line. Your credit limit is equal to the deposit you provide. Unlike a prepaid card, you need to pay off the debt by making monthly payments. The deposit is only used if you default. Buy a few items and make timely payments to help improve your credit score.