How To Repair Your Credit score In 7 Straightforward Steps

How To Fix Your Credit In 7 Simple Steps

 

The average credit score in the U.S. stands at 714, but that doesn’t mean everyone enjoys good credit. Most lenders use FICO scores to determine creditworthiness, with scores ranging from 300 to 850. A score below 580 is considered poor, and having a low score can limit your financial opportunities—whether it’s buying a car, renting a nice apartment, or purchasing your dream home. It can also mean higher interest rates on loans.

 

While improving your credit won’t happen overnight, taking steps now can help you start seeing benefits sooner, like qualifying for lower mortgage or car loan rates. Here are seven simple steps you can take to begin improving your credit score:

 

1. Check Your Credit Score and Report

 

Your credit report details your credit usage over the past decade. You have a credit report from each of the three main credit bureaus: Equifax, Experian, and TransUnion. It’s essential to review all three to ensure accuracy. Checking your credit score is also important, and many credit card providers offer free access to it. Remember, checking your own score won’t harm it, so make it a habit to review it monthly.

 

2. Fix or Dispute Errors

 

Errors on your credit report can harm your score. A study by the Federal Trade Commission found that one in four people had errors on their reports, with 5% of these errors potentially leading to higher loan costs. If you notice any mistakes, like incorrect account information or fraudulent activity, report them to the credit bureau immediately. Disputing these errors is usually a straightforward process.

 

3. Always Pay Your Bills on Time

 

Payment history accounts for 35% of your credit score. To keep it strong, prioritize paying your bills on time. Setting up autopay is a helpful way to ensure you never miss a payment. For bills that don’t allow autopay, pay them as soon as they arrive. If you’re struggling to meet payment deadlines, consider creating a budget or setting up a payment plan.

 

4. Maintain a Low Credit Utilization Ratio

 

Your credit utilization ratio is the amount of credit you’re using compared to your credit limit. Aim to keep this ratio below 30%. For example, if you have a total credit limit of $4,000 and owe $500, your utilization ratio is 12.5%. A lower ratio is better for your score, so try to keep balances low.

 

5. Pay Down Other Debts

 

Reducing outstanding debt not only improves your credit utilization ratio but also boosts your payment history. Whether you choose the debt avalanche method (focusing on high-interest debt first) or the snowball method (paying off smaller balances first), both can be effective in helping you pay down debt.

 

6. Keep Old Credit Cards Open

 

Closing old credit card accounts can shorten your credit history, which makes up 15% of your credit score. If you have old cards that are paid off, consider keeping them open, especially if they don’t have annual fees. Just be aware that issuers may close accounts after periods of inactivity.

 

7. Avoid Unnecessary Credit Applications

 

Every time you apply for credit, your score can drop by a few points due to the hard inquiry it generates. Additionally, opening new accounts can lower your average account age, negatively impacting your score. Only apply for credit when you really need it.

 

Can You Pay a Company to Fix Your Credit?

 

Credit repair companies typically focus on removing negative information from your credit report, but this is only one part of the process. These services can be costly, often ranging from $50 to $100 per month. While you can try fixing your credit yourself, if you need assistance, nonprofit credit counselors offer more affordable options.

 

How Long Does It Take to Fix Your Credit?

 

Improving your credit is a long-term process. Even after taking positive steps, it can take several weeks or longer for your score to reflect these changes. Monitoring your credit regularly can help you track progress and catch any errors.

 

Next Steps: Keep an Eye on Your Credit Score

 

Once you start working on your credit, make it a habit to check your score monthly. This allows you to track your progress and quickly address any issues that arise.

 

Don’t Have Time for DIY? The Credit Gardener Can Help

 

If your schedule doesn’t allow you to follow these steps on your own, The Credit Gardener is here to assist. We offer comprehensive services to manage everything from checking your credit score to disputing errors and improving your payment history. Let us handle the details so you can focus on what matters most. Connect with The Credit Gardener today and start improving your credit with ease.