What Steps Can Be Taken To Repair Bad Credit?

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Low Credit and Recovery Options Available

Depending on your credit situation, there are different options for credit recovery. For some, minor adjustments like increasing your credit mix or paying down a high balance card may give your score the boost it needs. For others, significant actions like debt settlement or filing for bankruptcy may be required to deal with serious debt. Many of these steps have long term ramifications – with effects lasting up to 10 years – and there are many different paths to better credit.

Here are the four steps we recommend using to develop your plan to improve your credit score and meet your financial recovery goals!

What Do I Need to Know About Each Type?

Each type of account varies in how the credit is accessed, as well as the repayment terms and penalties. Having multiple accounts and different types of credit accounts are ways to show creditworthiness to future lenders.

1. Identify what is hurting your credit

The factors that are impacting your credit scores can be identified by pulling your credit report. Three different credit bureaus, Experian, Equifax, and Transunion, each compile independent credit reports. You should review your reports carefully to understand what is bringing your score down.

For most people, poor payment history is the first thing bringing down their credit score. Your goal should be to have a near-perfect credit payment history. It only takes a single missed payment to knock you down a few points, multiply that by missed or late payments across many accounts, and it is a fast spiral out of control. By immediately committing to making every payment on time, every time, you will see an increase in your payment history, and over time, in your score as well!

2. Keep your expectations in check with credit recovery

It took more than a week to earn a low credit score, so it will take more than a week to bring it back up. It can often take months to begin seeing an increase in your score. Credit bureaus receive updates every 30-60 days from financial institutions, so if you are expecting a change, it can take some time before your credit score reflects it!

3. Take short-term losses for long-term gains

Sometimes, the best course of action is to sacrifice small hits to your credit score for a large increase over time. Some impacts to your credit can fade over time, like dips in your score due to hard inquires incurred from debt consolidation or new credit applications to increase your credit utilization. The long-term benefits of reducing your revolving credit account balances or increasing your available credit limit can end up increasing your overall score substantially.

4. Review your credit report for mistakes or errors

Even if you pay your credit accounts on time, have low utilization, and have a long history with a substantial mix of credit lines, you might still notice your score is lower than you think it should be. In step one, we recommended reviewing your report to identify any issues, like missed payments or inquiries, that might be lowering your credit score. However, it is also essential to carefully review the information on your credit report' to ensure it is accurate. No matter how big or small, mistakes or errors on your reports could negatively impact your score.

If you do find an issue, there isn't a simple fix. Unfortunately, you can't just login to your account and update your address or call a customer service number to resolve the issue. A dispute will need to be filed with the credit bureau to correct the mistake.

Navigating Credit Repair Is Our Specialty!

Starting your journey to better credit can feel daunting, especially when it comes to filing a dispute with a credit bureau. The process can be time-consuming, confusing, and frustrating. Plus, there are many options for your credit repair journey, and it can be challenging to decide where to start. That's why our expert Credit Helpers are here to walk you through your options and determine what will make the most impact to your credit. Whether you are looking to remove collections accounts, increase your credit opportunities, or file a dispute, we have the know-how to assist you on your journey to raising your credit score!

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