How To Repair Credit Yourself: 5 Super Easy Tips
Bad credit doesn’t have to mean the end of the world. Use these 5 easy tips on how to repair credit yourself and get back on track ASAP!
Are you in the process of trying to figure out how to repair credit yourself? There are millions of Americans who could benefit from doing it.
About one-third of the people living in the U.S. have bad credit, and even those who don’t technically have bad credit could still improve their financial well-being by improving their credit scores over time.
If your credit score has taken a nosedive in recent years, you might be considering how to repair credit yourself. It’s not always easy, but fortunately, you can improve your credit score pretty significantly over time by making the right moves.
Once you learn how to improve your credit, you will wonder why you didn’t do it much sooner.
Let’s take a look at how to repair your credit in 5 simple steps.
1. Check Your Credit Report
In order to figure out how to repair credit yourself, you need to start by obtaining a copy of your credit report. It will provide you with a snapshot of your financial status and let you know what your credit score is and how the credit bureaus determined it.
Despite the fact that checking your credit report is very important, whether you’re trying to learn how to repair credit yourself or not, almost 20 percent of Americans have never bothered to check it. As a result, there are many people who have discrepancies in their credit reports that they’ll never know they need to dispute.
When you check your credit report, you should look for anything that might look unfamiliar. Back in 2015, the Federal Trade Commission found that about 20 percent of people have at least one error on their credit report.
Fixing any potential errors could work wonders for your credit score and bring it up right away.
But if nothing else, checking your credit report will give you some much-needed insight into exactly where you stand with the credit bureaus so that you can go about fixing your score.
2. Figure Out Where You Need to Improve
Once you have taken a look at your credit report and studied it closely, you will be able to decide where you want to start making improvements.
Do you have too much debt and not enough credit at the moment? That could be holding you back and keeping your credit score low.
Did you default on a loan a few years back? That could be–and likely is–what is making it so hard for you to increase your credit score now.
Did you declare for bankruptcy a decade ago? That could also be playing a role in the status of your credit report.
Whatever the case, you’re not going to know how to repair credit yourself if you don’t have a clear idea of what has caused your credit score to go down. Find out what it is and then work towards correcting it.
3. Start Chipping Away at Any Debt You Have
The thing that causes most Americans to take a hit when it comes to their credit scores is credit card debt. The average American has almost $16,000 worth of credit card debt.
If credit card debt has been your downfall, you might feel overwhelmed by it. Where do you even start when you have so much debt?
The key to improving your credit score is gradually chipping away at credit card debt and other forms of debt slowly over time. It’s the only way you’re going to get any real results with your credit score.
While most people can’t simply pay down all their credit card debt at once, there might be options for you. Applying for a debt consolidation loan is one way you can tackle a massive amount of debt at once. Seeking debt relief is another.
Just be careful about applying for new loans when your credit score is already low. It could result in your score dipping already more than it already has (more on this later!).
But one way or another, it’s important for you to do away with debt little by little to get your score up again.
4. Correct Your Credit Utilization Ratio
One of the ways the credit bureaus create a credit score for you is by analyzing what is called your debt-to-credit ratio. It’s actually one of the most important factors you will face with your credit report.
Essentially, this ratio resembles how much debt you have versus how much available credit you have. As a general rule of thumb, you want to try and keep the total of your credit card balances under 30 percent of your total available credit every month. Otherwise, your score will likely start to go down.
Consider your credit utilization carefully when seeing how to repair credit yourself. By bringing your available credit up, you can really start to make progress on your credit score.
5. Stop Applying for New Forms of Credit
This should almost go without saying, but you would be surprised by how many people continue to apply for new forms of credit when their credit is already bad.
In most cases, these people will be denied credit, and even worse, they’ll see their credit score go down simply because they decided to apply for credit in the first place. A hard inquiry on your credit report can knock you down about 3 to 5 points and stay on your report for a year.
If you really have to apply for credit, try to do it with a company that will only make a soft inquiry at first to see if you qualify for a loan. This won’t hurt your credit score as much, and it will be helpful for those trying to learn how to repair credit yourself.
Whatever you do, don’t get frustrated when trying to fix your credit! When you make the right moves and stay with it, it will pay off in the end and lead you to a brighter financial future.
Find Out How to Repair Credit Yourself Even Further
Do you want more tips on taking better care of your money and paying down debt to improve your credit score? You can find plenty of ways to manage your finances more effectively.
Check out our blog to see some of the things you should be doing right now to put yourself in a better position financially.