Figuring out how to repair your credit is always a good idea if you currently have a bad credit score. Without bad credit, having to wait a year or more before you see credit improvement can seem like it’s taking forever. But learning how to repair your credit score is actually pretty easy – just a few steps can repair your credit quickly, so that can begin to see improvement in only a couple months. When you know how to repair your own credit, you an continue taking steps and see your scores improve without spending a lot of money, and even for free.
To start any program for repairing your credit history, you have to start by knowing what your credit looks like today. You can get a free credit report, and review it from there, but you also might want to see your credit report plus credit scores, which you usually have to pay for. When you subscribe to a service that gives you credit scores, it’s an easy way to keep track of the improvement you’ll see in your credit score as you start learning more about how to repair your credit yourself. Usually basic credit score services are as little as under $10 per month and you can often cancel at any time. But you don’t need your scores to start fixing credit, you probably already know you have a low score if you are past due or have a lot of unpaid debt. Maybe you’ll want to check your credit score at the beginning of your credit repair program, but then not get another credit score report for a few months, after you’ve taken some action.
Where is the best place to start to fix credit? The absolute most important item thing you must do now is bring your bills current, and start paying them all bills on time. Even if you debt is large, and bringing everything current is a lot of money, do everything you can to raise a few extra bucks and pay up. Sell some things online, get a part time job, stop buying fast food, and put the extra money toward your overdue bills. Once you bring your debt current, then start paying every bill on time. If you can’t afford your monthly payments we’ll discuss more on that below. But even if you have had a bad payment history in the past, just by doing these two things you could start to see improvements in your credit score within just a couple months.
Another thing you should consider is to close out some of the credit card accounts you have open. Some people say that closing accounts can hurt your FICO score. But if you have too many credit cards available to you, that can hurt your score too. It’ better to have a few accounts with balances that re under 50% of the total debt limit, instead of multiple accounts sitting there. Close some and that will also remove temptation from you possibly running up ore debt.
Most credit reporting agencies will say that once you take some steps to clean up your credit, it can take 60-90 days to show up on your credit report, since some update at the end of the month. If you are diligent about fixing your past due accounts, and reducing debt, then you will see improvement in 3-6 months. It’s hard to get around that unless you use means that are illegal or illegitimate – don’t fall for credit scams that say they can get you clean credit immediately. Sometimes you just have to be patient for three months until a change shows up that will positively affect your credit score.
What about people who have such bad credit that there is over a year or more of negative credit history? If this sounds like you, you might want to consider more serious steps. If you just can’t make your credit payments, then it’s possibly you should consider bankruptcy. A rule of thumb is: If your debt if more than your annual gross salary or wages, then it will take you a very long time to dig out of the debt hole especially as credit card companies now are raising interest rates and fees. This is when you might consider bankruptcy.
Once your credit has been negative for a year or more, filing for bankruptcy will not affect your credit history or credit score much for the worse. Lenders already see the past seven years of your credit history when making a decision, and your bad credit history will already cause problems even without a bankruptcy. One you file for bankruptcy, it may help you get back on your feet and have a chance to start over. (Remember, however that certain debts cannot be wiped out by bankruptcy, such as child support payments or student loans.)
It can be expensive however to file for bankruptcy. While many bankruptcy lawyers will give you a free consultation for a half hour or an hour, you will have to pay a retainer fee of $2,000 or more before they will file your paperwork. They should also talk with you to see if in fact bankruptcy is the right path for you to take. Just be wary of any lawyer that tries to rush you into filing bankruptcy – you always have options.
Will a credit counseling agency help you with how to repair your credit rating? It’s debatable. First, watch out for credit services that claim to improve your credit score by 100 or more points in just a month or two. This is virtually impossible to do legally. Also, they may charge you high fees, or a big percentage of the monthly payments you’re making. that said, some non-profit counseling agencies will help you for free. But be aware that many of these agencies are financially supported by the credit card industry, and will encourage you not to file bankruptcy but to pay your debts, even if that isn’t the right option for you. They will also be mainly concerned with getting you to pay your credit card debt but won’t help so much with late car or house payments or rent.
Another little known fact is that while they are telling you how to repair your credit score, they wont’ tell you that just using their service will hurt your credit score! That’s right – registration with their credit counseling agency, and entering into a repayment plan, will show up on your credit report, and many lenders treat this just like a bad credit mark and will not give you credit! So it doesn’t really help you if your goal is just to improve your credit report.
The bottom line is that if you are trying to learn how to repair your credit, there is plenty of information available to you to do it yourself. You don’t need to pay high fees, or hire a lawyer right away. You can take steps for how to repair your credit quickly once you see improvement you’ll be motivated to stick with your credit repair program.
