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The DOs and DON'Ts of credit repair

Posted by Garick Giroir on November 04, 2019

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If you’ve recently been rejected from a credit application of any kind, you may be looking at a poor credit score for any number of reasons. Maybe you've been late with your credit card payments, have an outstanding judgment against you or fell victim to identity theft.

Whatever the cause of the fall in your score, you’re probably looking for ways to get it back on track. Tread carefully! There are a lot of credit repair scammers out there looking to use your situation to make a quick buck. 

Follow these DOs and DON'Ts to get on the road to improving your credit score without any pitfalls.


Do: Review your report and dispute any errors.

If a recent credit application of yours has been denied, don’t take it at face value. Find out why it happened. Request a free copy of your credit report from a major credit reporting agency (such as Equifax, Experian, and TransUnion) and review it for inaccuracies.

If you spot any fraudulent purchases or erroneous information, send a dispute letter to the credit reporting company. Make sure to identify every item you are disputing and the reasoning behind your claim. Include copies of documents that support your case and ask that the errors be corrected. Make sure you keep a copy of your letter and supporting documents for your personal records.


Don’t: Expect any quick fixes.

If your credit score is bad, you may be bombarded with promotional material from credit repair companies that promise to increase your score by 100 points in less than a month. If you think these claims sound too good to be true, you’re absolutely right.

Understand that there is no “quick fix” for creditworthiness. Improving your score takes time, lots of hard work and commitment to a realistic debt repayment plan.


Do: Take steps toward fixing your credit.

If you’ve determined that your credit report is accurate, you’ll want to take a careful look at the habits that may be leading to your unfavorable score.

Are you timely with your credit card payments? If not, consider setting up an automatic bill-pay system so you never forget to make a payment.

Are you spending wisely? If you’re paying your bills on time but your debt is not going anywhere, make changes to your spending habits. Avoid shopping with credit cards. Stick to debit or cash. Look for ways to trim your expenses, like couponing, planning dinner menus around sale items, and finding cost-free ways to relax instead of retail therapy.

Are your monthly bills unmanageable? Consider debt consolidation. That is, transfer your debt to one low-interest account, or a card that has an interest-free period. Be aware creditors don't look too fondly on lots of open credit. So close as many accounts as you open, but leave your oldest one open as it shows a longer period of credibility.


Don’t: Expect to see any changes immediately.

Don’t fret if you’ve made strides toward fixing your credit but haven’t seen an increase in your score. Creditors generally report to the credit reporting agencies once a month. So it could take an upward of 30 days or more for your account to be updated and your score improved.

Do: Ask us for help.

If you’re in financial trouble of any kind, try reaching out to your credit union. Their expert advisers can help you start sorting out your money problems. Your credit union likely offers debt consolidation loans that will make the prospect of paying down your debt a lot more manageable.

 

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