Having a tarnished credit history can feel impossible to overcome. Even if your poor credit history was the result of something out of your control, a low credit score can negatively impact your ability to take on new credit when you need it. While there isn’t always a quick solution to credit repair, there are steps you can take to get on the right track.
Baby Steps Toward Credit Repair
1. Check your credit reports
We don’t just mean looking at your three-digit credit score; we mean pulling copies of your credit reports and looking through them. Combing through your three credit reports from Experian, TransUnion, and Equifax ensures that you know what’s causing your lower credit score and gives you the opportunity to fix mistakes that could be harming your credit. You can request copies of your credit reports for free, once a week, until April 2022. Visit AnnualCreditReport.com for more information.
2. Identify your problem areas
Do you have a history of missed or late payments? Do you have accounts in collections? Are your credit reports riddled with errors creating a low credit score? Identifying the issues that are hurting your credit score is the first step in fixing them.
3. Wait some things out
Severe credit issues, such as a vehicle repossession, missed payments, or even a dismissed bankruptcy, can harm your credit score for years. If these marks are correct, then the only thing to do is give them time to fall off your reports. Over time, the impact of negative marks decreases as well.
4. Seek credit repair help if needed
If your poor credit score is the result of multiple and severe inaccuracies, or it seems too overwhelming to tackle the issues alone, a credit repair company may be something to look into. These companies don’t just “fix” your credit score because you paid them, but rather help you on the journey to credit repair.
5. Pay down what you comfortably can
This always sounds easier said than done, but if you have past due accounts or high credit card balances creating a lower credit score, that’s a good place to start. Credit card balances that are 30% over their limit can harm your credit score, and accounts in collections hurt your credit and can impact your ability to take on new lines of credit. Collection agencies often allow payment plans, which could help you chip away at debt more comfortably, and paying a little more than your minimum payment on a credit card can help bring that balance down faster.
6. Keep old accounts open
In theory, it makes sense to close old accounts that you don’t use anymore, but your FICO credit score actually benefits from older accounts. The average length of your credit history matters, so the longer you’ve had accounts in good standing, regardless if you use them or not, the better off your credit score can be.
7. Consider a credit builder loan
As the name suggests, these loans are designed to give borrowers a chance to build a better credit score. Credit builder loans are typically small amounts that you borrow, then work to pay down over time – usually shorter loan terms around 12 to 24 months. Once you pay off the loan, you get the money, so it’s like building a savings and improving your payment history at the same time.
8. Take on credit when you need it, sparingly
In some cases, a bad credit score is a result of avoiding new credit, but this isn’t always the best course of action to improve your credit score. To build a good credit score, one of the better ways to do that is by having a long history of timely payments, since payment history holds the most weight in your credit score. However, taking on too much credit all at once can harm your credit score due to hard inquiries, and then you have to manage multiple accounts. Take it slow and take on new credit only when you need it.
Credit Repair With an Auto Loan
For many borrowers, they’re looking to improve their credit score to get vehicle financing or other loans. And here at Auto Credit Express, we aim to assist bad credit borrowers in need of auto loans.
We’ve created a nationwide network of special finance dealerships that specialize in assisting with credit challenges. Don’t go it alone on your next car loan – complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that’s equipped to help with unique credit issues.