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Do you have bad credit, limited credit or no credit history at all? If so, now is the time to take action. No matter what state your credit history is in or how poor your credit is, there are things you can do right now to make improvements.
Best of all, taking steps to repair your credit can be absolutely free. This article provides more information and tips for free credit repair.
What is free credit repair?
Free credit repair is the process of taking steps to repair and rebuild your credit history and credit score. While these repairs won’t happen overnight, you could see an improvement in your credit health in just a few months. Repairing your credit isn’t hard, but it does require a commitment to:
- Understanding your current credit history
- Keeping your spending under control
- Setting and sticking to a household budget
- Taking the right steps to repair your credit
Why is repairing your credit so important?
You might not realize just how important repairing your credit is until you go to get an auto loan, buy a home, apply for a credit card or take out a personal loan. In nearly all cases, the lender will review your credit history before approving the loan.
If your credit isn’t up to par, you may have a difficult time getting a loan for a car or home or a credit card. Even if your credit score is high enough to secure a loan or credit card, you’ll likely face higher interest rates if your credit isn’t good or excellent.
Having bad or limited credit can impact more than just your ability to get a loan or credit card—it also can make it difficult to rent an apartment, or even secure your dream job. With easy access to credit scores, many landlords and some employers use credit reports in the decision-making process.
Tips for free credit repair
Free credit repair may seem intimidating. However, if you take it step by step, you can start to see your credit improve. Here’s a look at some steps you can take.
Request a copy of your credit report
Before you can work toward building your credit, you must first know the details of your credit report. Fortunately, you can request free copies of your credit report each week. The three major credit reporting agencies, TransUnion, Equifax and Experian, currently allow consumers to request a copy of their report on a weekly basis.
The easiest way to access these reports is through AnnualCreditReport.com. By providing your basic information, you can get instant access to your credit reports.
Alternatively, you can contact each credit reporting agency separately to request a free copy of your credit report.
Review your report
Once you have access to your credit report, you want to check and double-check all the information on it. Studies show that millions of consumers find errors on their credit reports every year. About 13 percent of respondents found errors that impact their credit score, while 5 percent claimed mistakes on their credit report prevented them from getting a loan or caused them to face higher interest rates.
Carefully check your personal information to make sure the details are correct. Next, check through every account or detail listed. For debt accounts, make sure the account details are accurate as well as the amount owed.
If you detect any type of error, there are steps you can take to challenge these details and have them removed from your credit. Keep reading to learn more.
Dispute any errors
If you find any mistakes on your credit report, it’s crucial that you take steps to have this information corrected. Otherwise, it could continue to negatively impact your credit for years to come. In fact, it can take up to seven years, or 10 years with some types of bankruptcies, for negative information to drop off of your credit. You don’t want to wait that long for this information to disappear from your credit report.
The first step is to send a dispute letter to the credit reporting agency listing the error. If multiple reports contain an error, you must send a separate letter to each applicable agency.
In the letter, provide a detailed explanation of what information is incorrect and why you think it’s wrong. If relevant, include any documentation to support your case. Also, be sure to include your current contact information.
Follow up with credit bureaus
Credit bureaus have 30 – 45 days to review your dispute letter and evaluate its merit. Once this investigation is complete, the bureau must contact you in writing within five days and explain its decision.
If the credit bureau agrees with your dispute, you should see the correction on your credit report within a month or two. On the other hand, if the credit bureau still believes the information on your report is correct, you may need to send a second dispute letter. In this letter, be sure to provide plenty of evidence and address any concerns.
While you can handle the dispute process yourself, it can become overwhelming, depending on your specific situation. An alternative method to dealing with credit report disputes is to work with a professional credit repair company that can handle this process for you.
Determine your credit score
Once you have your credit report in order, you can check your credit score. Unfortunately, your credit score isn’t part of your credit report. Instead, credit scoring companies calculate your credit score based on various factors from your credit report, including:
- Payment history
- Credit utilization
- Age of credit
- Credit mix
- Credit inquiries
While there are many credit scoring companies, FICO® and VantageScore® are the two most popular.
One of the easiest ways to get your credit score is with a free credit assessment. In addition to free access to your credit score, you’ll also get a free credit report summary and free credit repair recommendations. If your credit score is below 660, it’s important to start taking steps now to repair your credit. Even if your credit score is in the good range (661 – 780), there’s always room for improvement.
Develop a plan for paying down your debt
One of the best things you can do to improve your credit is to take steps to pay off your debt. There are several methods you can use to start paying down your debt, including:
- Pay more than the minimum balance each month.
- Make extra payments during the year.
- Use the avalanche method by paying off your debt with the highest interest rate first, then the second highest, and so on.
- Use the snowball method by paying your smallest debt first, then the next smallest, and so on.
- Consider a debt consolidation strategy that can pull all your debts into one loan.
Start building your credit
In addition to paying down your debt, you can also take steps to start building your credit. First, it’s important to make sure you’re paying all your bills on time each month. After all, your payment history accounts for up to 35 percent of your overall FICO credit score. You also want to be careful not to incur any more debt unless it’s absolutely necessary and your monthly payments can comfortably fit your budget.
Once your credit starts to improve, you should evaluate the type of credit accounts you have. To improve your credit, it’s important to have a mixture of both installment credit accounts, such as an auto loan or mortgage, and revolving credit accounts, such as a credit card or home equity loan.
When possible, try to obtain a nice mixture of credit accounts. But be careful not to apply for too many credit cards too quickly—having too many hard inquiries against your credit can have a negative impact on your credit.
Where to start with credit repair
Are you ready to start repairing your credit? If so, your first step should be to require a free credit repair assessment. This step can give you quick and easy access to your credit report and credit score and provide some tips for rebuilding your credit. Request your free credit assessment from Lexington Law today.
Note: The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.