In the US, nearly 16% of people have a credit score that falls under 600 points, making it nearly impossible to receive a loan or qualify for a credit card. For some, a low credit score can even get in the way of securing housing and other essentials.
If you can relate, you’re not alone. And thankfully, there are ways to fix your credit and raise your credit score.
But there are also some common credit repair mistakes that can do more harm than good. Read on for eight ways you shouldn’t try to repair your credit and what to do instead.
1. Avoiding Your Credit Report
You may have a sneaking suspicion your credit report doesn’t look so good, yet you avoid looking at it to save yourself the stress.
But without reviewing your credit report, you can’t understand exactly what’s wrong and what needs to be fixed. In other words, without knowing where you’re starting, it’s hard to end up where you want to be.
To start fixing your credit, request a copy of your credit report from your bank or a credit bureau (you can access your credit report for free at least once a year).
Check that all information on the report is accurate and error-free. Note if all your current accounts are listed and that no accounts not belonging to you are included.
If you find anything unusual or false, it’s possible to dispute it and have it removed from your credit report.
2. Missing Payments
As you work to repair your credit, you may realize that some payments seem more important to others. For example, it’s practical to prioritize paying off debts carrying high interest.
But as you work to tackle certain payments over others, you should never make the mistake of missing payments.
Put more money towards certain accounts that require larger payments, but don’t ignore or forget others. No matter how much the payment is or how small a balance stands, a late payment will always hurt your credit.
Be sure to organize all payments every month, automating them when possible to make sure nothing gets neglected.
3. Closing Credit Accounts
You may have heard that having too many lines of credit can be a red flag for lenders. This can hurt your credit score, making you seem like a risk.
But despite what you may think, the answer isn’t always to close your extra credit accounts. If a credit card has been paid off, keeping the account open can actually enhance your credit and demonstrate your ability to stay on top of debts.
Another benefit of keeping your accounts open is that it establishes a long credit history. The longer you’ve had a credit card account open, the more it can help your credit score.
4. Calling Debt Collectors
You’re ready to repair your credit, finally facing the pile of letters from debt collectors.
You locate a toll-free phone number, dial it into your phone, and start speaking with a debt collector who is eager to receive your payment.
Calling debt collectors directly may seem like the responsible thing to do, especially if you owe your bank or a lender money. But it’s a mistake you’ll want to avoid at all costs.
Debt collectors can use unlawful tactics to try to get your money. And unless you understand all your rights, you may not know when they’re crossing the line.
They can also be extremely manipulative and persuasive, even if you don’t really have the money they’re asking for.
Instead of talking with debt collectors on the phone, stick to written communication only. That way, you have everything in writing to refer back to, and it’ll be easier to stick to a repayment plan you can handle (without being pressured into paying more).
5. Trusting a Credit Repair Company
Having financial troubles can feel isolating, and it’s okay to ask for help. But a credit repair company may not be the best resource for fixing bad credit.
Often, credit repair companies promise results that they can’t really offer. And they charge you a hefty fee, which can sometimes drive you deeper into debt than if you simply figured things out on your own.
If you’re worried you don’t have the time or knowledge to fix your bad credit, the Credit Score Blueprint Masterclass is the perfect solution. If offers all the essential information you need to transform your credit without relying on shady companies.
6. Keeping High Balances
It’s okay to use your credit cards. But if you want to repair your credit, it’s a mistake to max them out, even if you pay them off every month.
Keeping high balances on your accounts can hurt your credit because of the credit utilization rate. Essentially, this rate calculates how much you owe compared to what your credit limits are.
Taking all your credit into account, it’s best to utilize no more than 30% at a given time.
7. Applying for Credit on a Whim
You may think that a credit card you were offered in the mail is a great way to build back your credit. But you should always be thoughtful with the credit accounts you apply for and open.
Avoid applying to too many credit cards at once, and don’t apply at all if your credit is still low.
When it comes to repairing your credit, the worst thing you can do is wait.
The longer you put off fixing your credit, the slower the recovery will be. This is especially true if you find errors on your credit report. The sooner you can get them removed, the quicker your score can improve.
Avoid These Credit Repair Mistakes
If your credit needs a boost, avoid making these common credit repair mistakes that will only sink your credit score more.
Now that you know what not to do, learn exactly what you should do with the Credit Score Blueprint, a DIY credit repair program with proven results. Sign up now to start crushing bad credit!