Credit Repair Tips on How to Fix a Score & Maintain Good Credit
Credit Repair may be able to remove inaccuracies contained in your report, prevent identity theft and build your credit over time. These credit repair tips may show you how to improve your score. Believe it or not, 30% of your score is measured as the ratio between how much you owe to how much is available to you. So, keep your credit lines open, but your balances LOW. 35% of your score is based on punctuality of payment; meaning, don’t be late!
Credit Repair Tips – #1 Payment History
Contributing 35% to your score calculation, your payment history has the greatest effect on improving your score but past problems like missed or late payments are not easily fixed.
- Pay your bills on time. Delinquent payments, even if only a few days late, and collections can have a major negative impact on your score.
- If you have missed payments, get current and stay current. The longer you pay your bills on time after being late, the more your score should increase. Older problems count for less so poor performance won’t haunt you forever. The impact of past problems on your score fades as time passes and as recent good payment patterns show up on your report. Good scores weigh any problems against the positive information that says you’re managing your credit well.
- Be aware that paying off a collection account will not remove it from your report. It will stay on your report for seven years.
- If you are having trouble making ends meet, contact one of our Financial Wellness advisors for a free consultation. This won’t rebuild your score immediately but if you can begin to manage your credit and pay on time, your score should increase over time. Seeking assistance from a debt consolidation service will not hurt your score.
Credit Repair Tips – #2 Amounts Owed
This category contributes 30% to your score’s calculation and can be easier to clean up than payment history but that requires financial discipline and understanding the tips below.
- Keep balances low on credit cards and other “revolving accounts”. High outstanding debt can affect a score.
- Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your score.
- Don’t close unused credit cards as a short-term strategy to raise your score.
- Don’t open a number of new credit cards that you don’t need just to increase your available credit. This approach could backfire and actually lower your score.
Credit Repair Tips – #3 Length of Credit History
- If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly.New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
Credit Repair Tips – #4 New Lines
- Do your rate shopping for a given loan within a focused period of time. Reports distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
- Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
- Note that it’s OK to request and check your own credit report. This won’t affect your score, as long as you order your report directly from the reporting agency or through an organization authorized to provide reports to consumers.
Credit Repair Tip #5 – Types of Credit Use
- Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix – it probably won’t raise your credit score.
- Have credit cards – but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
- Note that closing an account doesn’t make it go away. A closed account will still show up on your credit report, and may be considered by the score. To summarize, “fixing” a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent, good credit history. Raising your score after a poor mark on your report or building credit for the first time will take patience and discipline.