DIY credit repair involves steps that you can take to enhance your credit score. A bad rating impacts your financial future. An undesirable score keeps you from getting loans. It’s imperative to repair your credit to enjoy the perks of borrowing, credit card usage, and a lot besides. Some employers also consider credit history when hiring employees. So, the sooner you fix your credit standing, the better the outcome will be.
DIY credit repair steps
Many folks think that repairing credit on your own may be daunting and difficult. However, you can definitely improve your score. All it takes is dedicated efforts in the right direction. Before you try these steps, have your social security number, date of birth document, proof of address, and bank account details handy. You may need these details from time to time during the credit repair process. Let’s begin.
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DIY credit repair step 1 – Obtain your credit reports
Three credit bureaus review your credit rating. According to law, each of these agencies has to submit a copy of your report to you once a year. Creditors and lenders report your positive/negative financial activities to these bureaus. So, get a copy of your report from these three agencies.
Remember, these reports aren’t foolproof. Yet, they can impact your ability to get loans and related chores. So, you may want to check them properly. The beauty of these reports is they itemize your history concerning credit. So, you can find out what items are bringing your score down. You can get one copy of your report from one agency at different time intervals or simultaneously. The choice is yours.
However, when pursuing DIY credit repair, try to get all these reports at once. That way, you’ll get a clear-cut idea of where you stand in the eyes of each bureau. Today, you can also get a copy of your reports online. However, beware of fraudulent activities. Many websites seek your valuable details for fraud. So, stick to the resources that the FTC (federal trade commission) approves.
DIY credit repair step 2 – Examine those reports
Once you have your credit reports in your hand, inspect them minutely. Some folks go through their reports in haste. Then some individuals examine them once. Both situations stand undesirable. As a smart person, go through each report individually. Also, take time to review those reports.
First of all, find errors or typos in your information, maxed-out accounts, and late payments. Also, look for unknown accounts; they could be a sign of ID theft or fraud. Additionally, check accounts gone for collections and accounts that you requested to close but are open. Document all negative marks and find the creditor or account to which they’re attached to. You’ll have to address each mark.
DIY credit repair step 3 – Address correct negative marks
As far as negative marks go, you can categorize them into correct and false marks. Credit bureaus have nothing to do with accurate marks. You’ve to contact your creditors or lenders to address those marks. There are two solutions to get rid of accurate negative marks from your report. First, you make the payment and let those marks fall off your reports. The second option involves a diplomatic approach with your lenders and creditors.
For instance, you may ask your lender or creditor to resolve delinquent payments by working out a new solution with them. Taking care of unwanted accounts or past dues can positively impact your credit. A diplomatic approach includes sending a goodwill letter to your creditor. You may have a sound standing and good relations with your creditor.
However, you might have made a late payment in one situation due to an unusual reason. That late payment transaction will show on your report, negatively impacting your score. If that’s the case, send out a goodwill letter to your creditor asking him to remove the information as a courtesy. There are high chances that the said creditor may remove it.
DIY credit repair step 4 – Dispute misinformation and false items
If you spot inaccurate negative marks or misinformation, reach out to the reporting agency. Tell them about the inaccuracies. The credit bureau will ask you to file a dispute along with proof to back your claim. There are various ways to file a dispute claim. Popular options include online, physical mail, and over the phone.
The preferred dispute option depends on the agency. When filing a dispute, include false information such as inaccurate personal details within your statement. Send the dispute to the agency that falsely reported them. The following are the common examples of false and negative marks and what you can do with them.
Unclosed accounts
In case you find that an account you requested to close remains open, contact the lender/creditor. Make sure that the account gets closed. Now dispute the said account until it gets removed from your name.
Unknown accounts
If you see unknown accounts opened in your name, there might be some kind of fraud. Contact the entity that holds your account, initiate an investigation, and work with them to remove that account. If your claim gets approved, the rating agency will remove that account. Once removed, your score will get a boost.
DIY credit repair step 5 – Review the decisions and respond, if necessary
Credit reporting agencies have 30 to 45 days to send their response to you when they get your dispute statement. By that time, the agency sends your information and statement to the concerned organization or lender. The organization or lender in turn then investigates the dispute and sends a reply to the credit bureau. When the investigation is finished, the rating agency sends you the results.
When you receive the result, review it thoroughly. If the results are favorable, then your score should automatically improve. What if the results aren’t favorable? If so, you may want to dispute again. Contact the organization or lender that reported to the rating agency and seek additional information on the matter.
File a new dispute with the credit reporting agency. Include the new information in your statement so that the agency will contact the organization or creditor with more evidence. The dispute results should come in your favor now.
If you think that there won’t be a fair resolution, contact a higher authority. Consult a lawyer or complain to the CFPB (consumer financial protection bureau). If your claims are genuine, you’ll get a positive outcome, which should increase your score.
DIY credit repair step 6 – Avoid multiple lines of credit at once
When following credit repair steps, you must avoid new lines of credit. If necessary, apply for no more than one option. Each time you seek credit, rating agencies see it as a hard inquiry, which might factor into your report and subsequent score.
Rating bureaus also give a negative score for seeking multiple credit lines within a short span of time. So, try to curtail this habit. If you need credit, apply for one option. Go for another option after a few months. By doing so, you don’t lead agencies for a hard inquiry.
DIY credit repair step 7 – Stick to healthy credit habits
After addressing negative marks and false information, it’s time to improve your score further. Now, your past transactions and existing reports have nothing to do. It’s all about your current financial habits. If you don’t switch to healthy credit habits, your rating won’t improve. Consequently, you won’t enjoy credit from banks or private lenders. So, take time to change your habits.
DIY credit repair step 8 – Pay bills on time
Some folks just don’t make payments on time for no reason. They’re into procrastinating and delay anything they’re obliged to do. If you come into this category, pay off the bills on time. Each timely payment adds a positive mark to your rating. In case you forget to pay bills on time, enroll in auto bill payments. That should ensure you don’t fall behind in payments.
DIY credit repair step 9 – Check expenses and clear your debt
A single late payment transaction is easy to address. Just send a goodwill letter to the said lender or creditor. They should remove the negative mark. What about multiple debts on your head? If that’s your situation, you’ve to clear those dues.
There are many approaches you can take to pay off the debt. First of all, assess your spending habits. Do you expend money on unnecessary chores? If so stop spending on those items. For example, you might be visiting a gym. Why not start exercising at home?
Besides this, check your purchase habits. Do you buy groceries daily? If so, buy them once a week. Bulk buying will let you save a great deal of money. Also, check your appliance purchase tenure. Changing your appliance-buying pattern is the best DIY credit repair tip that works. Many folks buy a new appliance on its introduction. Common examples include a Smartphone or a refrigerator. You may likely have an old item but wish to switch to a new product. However, don’t be in a rush to make the change.
The newly introduced item may attract a higher price. Instead of buying each gadget individually, wait for the festive season. Set aside some money for the appliances. Most brands slash down the prices during off-seasons and festive seasons. You can also slash your bills further by buying more than one appliance from the same outlet. All these activities will ensure you’ve money in your pocket at the end of the month.
Now, arrange debts in such a way that the item with a higher interest rate is on top of the list. Use the saved money to clear the high-interest debt. Repeat the process until the debt is paid off completely. Follow the same process for other debts. Over time, you could come out of debt.
If you’ve multiple debts, try to consolidate them into one. Communicate with your creditors to work out a solution. In most cases, they’ll be willing for a settlement. Ask them to waive off the unpaid interest. Also, seek more time for repayment. If you consolidate your debts, you’ll have to report to one lender or creditor. Here, you’ll have to make one payment to one person each month. Such an adjustment will let you clear your dues with minimum hassles.
DIY credit repair step 10 – Keep a low credit card balance
Maintaining low balances on your credit cards can positively affect your score. The amount of debt you’ve on your credit card compared to your credit limits is termed credit utilization. It accounts for 20 percent of your Vantage score and 30 percent of your FICO score. That also means you must not borrow more that you can’t afford to pay off.
In case you use your credit card for purchases, curtail your habit. Use a small percent of the credit for small purchases and make timely repayment. Your small move will raise your rating over time.
DIY credit repair step 11 – Avoid piggybacking
Piggybacking is the practice of being added as an authorized user to someone’s account. In most cases, the authorized user doesn’t get access to the credit account. This strategy only works if the primary account holder maintains a good score on the said credit account. Those positive attributes will show up in your credit report.
What if the primary account holder messes up with the credit account? If so, the negative attributes will count in your name too. You may curse yourself for becoming an authorized user. So, it’s best to avoid this practice in the first place. Never become an authorized user of someone’s account, especially if the person in question has a history of bad credit.
Bottom line
A good credit score can streamline your financial life. As well as ensuring affordable loans, your reputation in society improves. So, follow the above DIY credit repair steps meticulously. While it’ll take time, you’ll see visible results in the form of improved credit. If that sounds too much, take online training in this respect. The Credit Score Blueprint is a special mention here. It’s a simple step-by-step course that teaches you how to repair your credit. Many folks have benefited from the course. You could be among them too.
