Credit restoration can open the door to a variety of financial opportunities, from getting approved for a loan or renting an apartment to obtaining lower interest rates on credit cards. But repairing your credit score isn’t always easy. Here is a step-by-step guide to credit restoration.
1: Identify What’s Dragging Your Score Down
Before you can start credit restoration, it’s important to identify what is dragging it down in the first place. You can get a copy of your free credit report from each of the major credit bureaus, so you have an understanding of what’s facing you. Go through each report with a fine-toothed comb to look for any inaccuracies or errors that could be skewing your credit score.
2: Follow a Plan of Action for Improvement
Once you’ve gotten a handle on which factors need to be addressed, it’s time to come up with an actionable plan. A good path consists of getting copies of any delinquent accounts that need to be paid off, keeping your current debt balances low, and making all payments on time for many consecutive months. Finally, make sure to stay away from applying for new credit to keep the inquiries on your credit report low and maintain the overall health of your financ
3: Pay Your Bills on Time
Paying all credit card and other bills on time is key for creating a positive record of repayment. You should make all payments as early as possible to ensure your creditors get their money in a timely fashion and don’t carry negative reports on your credit report. If you’re paying just before the due dates, late payments will likely be recorded and damage your score. Make sure to check in with the creditor regularly to confirm that any payments have been recorded, so that you can take action if there are any discrepancies.
4: Manage the Credit Accounts You Have Wisely
Once you are taking steps to credit restoration, you must use the credit accounts you have wisely. Only charge what you can afford to pay off and make sure to follow through with all payments. Remember, payment history makes up much of your credit score, so be sure to stay on top of all account balances. Also, consider making timely payments throughout the month instead of all at once at the end of each billing period. Doing so helps average out any unpaid balances, reducing the risk of late payments being reported on your credit report.
5: Dispute Errors and Unfair Marks on Credit Reports
Errors on your credit report are a common form of credit damage. You can dispute errors with the three major bureaus: directly or use an app to manage disputes for you. It’s important to remember that it’s illegal for businesses to report unfair or inaccurate information about you on their reports. If incorrect information is being reported, contact the business in writing with evidence and give them many days to investigate the issue. If they still refuse to correct the issue, contact a consumer law attorney.
