Credit Repair That Works: Proven Moves to Raise Your Score Fast

A strong credit score gives you financial leverage. For instance, your credit score determines whether you pay $400 a month more for the same car as someone with better credit, whether you get approved for housing, and sometimes whether a potential employer will even call you back.

Unfortunately, it doesn’t take much for your credit to get hit when you experience even slight financial difficulties. But rebuilding credit (or building it from scratch) isn’t hard. When you know the rules and take the right actions, you can increase your score.

But not every piece of advice out there is solid. Let’s explore what actually drives results.

Start by pulling your reports and auditing every line

Credit repair starts with total transparency, even if your financial past is messy. You need to obtain your full reports to know what’s hurting you. The Fair Credit Reporting Act (FCRA) gives you the right to dispute inaccuracies on your credit reports. If there are errors, you can challenge them. Errors are pretty common. According to statistics, one in five Americans will find errors on their credit report, and around 20% who pursue resolution see a positive increase in their score.

If you find errors on your reports, the best path forward is to contact a consumer protection law firm that helps people fight inaccurate credit data under the FCRA. You’ll get better results than you would by trying to fight it on your own.

Get your Consumer Disclosure Report

If you’ve never heard of Consumer Disclosure Reports, this section is crucial. Most people have no idea there is a permanent record of their financial history and other aspects of their personal life maintained by LexisNexis that employers, lenders, schools, and many other people can pull with permission. This report includes all inquiries made to your file and information that doesn’t show up on other reports. Some people give permission to pull this report, mistakenly believing it’s a standard credit report. It’s anything but.

This report will show every name and address you’ve ever had, public records like real estate ownership, professional licenses, and court records, lifetime credit history, driving records, rental history, employment history, and even bankruptcies that are too old to show up on regular credit reports.

If you want to know what lenders and potential employers are seeing when they pull your reports, you need a copy of your Consumer Disclosure Report. If you’ve been getting denied for no apparent reason, the reason could be found in this report.

Work on your accounts in collections

Collections hit your credit score hard, but not all of these debts (and subsequent damage) are permanent. Some can be erased or negotiated. For example, medical debts under $500 are no longer reported on credit reports.

Pay down your debts based on where you can make the most impact. For instance, if you have two debts and one can be paid off much sooner, start with that one first. It doesn’t make sense to put all your money toward a debt that will take years to pay off at the expense of ignoring a debt you can eliminate in just four months.

Although paying down debt is good, it’s crucial to understand that paying off debts doesn’t always delete the entry. A debt might show up as having been in collections even after it’s paid off. This can still harm your opportunities, so it’s worth contacting your debtor to negotiate the terms first. Some agencies will agree to remove reporting if you settle, but you need to negotiate to get that kind of deal.

Optimize your utilization ratio

Credit utilization can make a huge difference in how much risk you project to potential lenders. Utilization influences 30% of your FICO score, and managing it is actually pretty simple. You want balances that are low compared to your limits. In other words, don’t max out your credit cards.

If you’ve been told you need to carry over a balance on your credit card to build credit, that’s a myth. Paying your balance in full each month is the best way to improve your score and avoid interest.

With some cards, if you always pay in full, you’ll never have to pay interest.

Credit power comes from discipline

Repairing your credit isn’t hard if you approach it strategically. Once you get your reports to know where you stand, you can find and fight any errors, pay off debts in collections, and work toward rebuilding a positive score.