Repairing Your Credit DIY Style

Wednesday, January 13, 2010

The number one thing that the big credit card companies like VISA, Mastercard, and AMEX and large mortgage lenders such as Quicken Loans look for when qualifying someone for a loan is whether or not they will be able to pay it back. Bad credit says that you are a high risk consumer and should be charged at higher interest rates as a result.

However, having bad credit is not the end of the world. While it may take some time, your credit score can in fact be repaired and the result can translate into all kinds of saving whether more attractive interest rates on credit cards or affordable mortgage quotes on a home loan or refinance home loan.

In most situations, there is no need to hire a credit repair service or a lawyer to restore your credit, as you can do for yourself pretty much anything they can do at minimal cost. The following are some helpful tips on how to go about fixing your credit:

Pay your Bills

This is definitely a no-brainer. Easily the best way to start improving your credit score is to consistently pay your bills on time every month. All it takes is one late payment to lower your credit score and any additional delinquencies, charge-offs, and/or accounts gone into collections can significantly impair your credit score.

Get Your Current Credit Report

Be sure to get a current copy of your credit report. is a really inexpensive and safe site for this as it’s the only authorized source where you can view your credit report from each of the three major credit reporting agencies- Experian, Transunion, and Equifax, online for free. Be sure to closely check your credit report often to ensure that creditors are correctly reporting on your accounts. Absolutely dispute any incorrect information. Consumer reporting agencies are legally obligated to investigate items in question within 30 days. Once the investigation is completed, the reporting agency will send you a written report of the outcome as well as a free credit report if the dispute results in a change.

Pay off Old Debt

It is vital that you payoff off any outstanding debt if you want to raise your credit score. It is important to mention that paying off a delinquent account will not instantly remove it from your credit report. Any charge offs or negatives on your credit score will remain for seven years after the date of being paid off. However, you can request reporting agencies to state next to the charge off or negative that the account has been paid in full.

Some people experience a drop in their credit score immediately after paying off a collection, however, it will only be temporarily. This happens because when an old account is paid, the date of last activity is renewed and reevaluated in the credit-scoring formula causing the chargeoff or negative to look more recent than it actually is. Again, this drop is only temporary and your credit score will increase in time.

Manage Your Credit Wisely

This means apply for credit sparingly. Don’t apply for every credit card or loan that comes your way. Too many inquiries on your credit report can affect your credit score negatively and possibly reduce your score to the point where creditors won’t offer you the best terms.

** This article has been a paid service.

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