How to Repair your Credit Score in a Year

This is a guest post by J. D. Roberts. If you'd like to guest post on this blog, click here.

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One of the most important things every consumer needs to know about credit repair is that there is no easy way to achieve better credit. You cannot buy better credit and you can’t just sit back and do nothing.

There must be an effort on your part and you must have some patience as it will take time to rebuild deficient or poor credit scores. Hopefully these credit repair tips will help you repair your credit as soon as possible.

Work for the Best Score

If you are looking to secure a loan, a mortgage, or a new line of credit, it is always in your best interest to wait until your credit score is the best it can be before submitting an application. This way you can ensure the best interest rates and guarantee yourself approval of your credit request. Lenders are much stricter than in years past due to the state of the economy and the heightened level of payment defaults by consumers that are out of work and unable to meet their financial responsibilities.

As a consumer, you have the capability and the responsibility to keep your credit in a range that reflects responsible credit use. Good credit scores range from 730 and above. Any score below that may not grant you the best rates or chances of approval. Scores below 700 may get you denied or at the least force you to pay higher interest charges. As every consumer should be focused on spending less and saving more, having a low interest rate really does matter.

What to Expect in a Year

Credit repair is a progressive process. It requires continual attention to details and while not all consumers are comfortable working on their own behalf, it is the only way to ensure your credit is improving and you are not spending money on assistance that may or may not help. You, as a consumer, have the power to repair your credit score in a year’s time or less in most cases.

Know Where You Are

When you are starting on your journey to better credit you need to start by ordering your credit reports from the major credit reporting bureaus. You have the right to request a free copy of your credit report once a year. While this credit report contains vital information, it does not contain your credit score. You’ll have to pay a small fee to obtain your score so be sure to get that information. Alternatively, CreditKarma.com offers you your TransUnion credit score, which can be checked daily for free. You can gain instant access by ordering online or you can call or mail a request for the score and credit report information.

Review Your Financial Life

Once you have your credit reports and score in hand, make sure you go over every bit of information in the report. It will outline all of your creditors, your unpaid balances, and your payment history information. Make sure all information is accurate. It is estimated that over 80% of consumer credit reports contain inaccurate information that reduces your credit score. Check everything from your name and Social Security number to every creditor account being listed.

Make the Corrections

Each credit reporting bureau has specific directions for disputing inaccurate information. Follow those directions and file one form for each dispute. Only dispute incorrect information listed on your credit report. The credit bureaus will launch an investigation and if they feel you are sending frivolous requests, they will not proceed with an investigation nor will they correct any data that is correct.

Pay On Time

Your payment history is a large factor in the credit score calculation. For this reason, it is vital you pay all of your bills on time, preferably before the billing due date. Set your payments up through your bank or your creditor so they will come out automatically several days before they are due. With on time payments, you can realistically begin to see a better credit score after three months’ time.

Plan for Wise Spending

Part of your credit score reflects how you use the credit you have. For this reason it is important to have a financial plan to show lenders you are responsible with the credit you already utilize. Create a budget if you don’t already have one so you will know where each penny you earn is going. Utilize credit cards for purchases only when you have the cash equivalent in the bank. Never use credit cards for things you cannot otherwise afford. This will ensure you do not overextend your current lines of credit which is important to lenders and to your credit score.

Reduce Debts ASAP

Once your budget shows you exactly where your money goes, you can use that information to allocate more cash towards your debts. The more balances you can pay off, the better your credit score will become. It will depend on how fast you can get rid of debts as to how fast your credit scores will begin to improve but your scores will reflect this effort.

Follow Up, Follow Through

There is no way to know how you are doing in your credit repair efforts unless you follow up with those efforts. After three months of work repairing your credit, order your credit reports with score again. See what has changed in three months’ time so you will know where to focus more attention. It is important to regularly review your information as not all creditors can be counted on to report accurate information about your efforts. If you notice more inaccurate information, contact your creditor directly and file another dispute with the credit reporting bureaus. You cannot rely on three months’ of work and then quit. You must continually check in with your credit moving forward about every six months. After you achieve a credit score in a good range, it should be sufficient to check every year.

A Year of Change

In order to improve your credit score, you may need to overhaul your entire financial life. This can appear to be a very overwhelming task to take on but it is imperative to improving your entire financial life. Start with the basic steps above and it will lead you into a routine of better credit use and better money management habits. These new habits should replace impulsive spending and racking up credit card bills you cannot afford. These changes are not very difficult but it is important you are consistent in your efforts.

Depending on where you started, you should be able to see a vast difference in your credit score within a year’s time – sooner if you were more proactive about reducing debts and avoiding new lines of credit. Remember too that your credit score dictates many things in your life and not just interest rates on loans. Auto insurance, rental properties, and utilities may require a good credit score in order for you to get low rates and avoid down payments. It is also important to check in with your credit on an ongoing basis in order to catch incidents of fraud or identity theft.

You, as the consumer, should know how to repair your credit score because of poor credit mistakes of the past. While there are third party individuals that can aid your credit repair efforts, ideally you should work on improving your own credit score and incorporate better credit habits into your overall life rather than depend on someone else to do the work for you.

This guest article was written by J.D. Roberts who is a seasoned writer in personal finance, specializing in credit repair. You can find more of his articles located at CreditRepair.org.

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