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How To Repair Credit | Bankrate




Your credit score is one of the most important aspects of your financial health, but it’s also one of the most fragile. Building a great credit score can take years, but damaging it can seem to happen—in some situations—overnight.

Thankfully, with the right credit repair tactics, you can reclaim this pillar of your financial strength. Knowing how to repair credit can get you back on track and put the days of less-than-great credit behind you.

What can damage your credit?

Your credit score is a reflection of your likelihood of defaulting or missing payments on a loan in the future. Anything that makes you riskier in the eyes of lenders or demonstrates that you might not be an ideal borrower can damage your credit. Some of the more common causes include missed payments, late payments, too many hard credit inquiries, too much outstanding debt or too short of a credit history.

5 steps to repair your credit

  • Check your credit score and pull your report from each credit bureau
  • Review your report and dispute any errors
  • Make a payment plan
  • Establish a positive credit history
  • Seek out credit counseling to discuss your options

1. Check your credit score and pull your report from each credit bureau

The first step in the credit repair process is understanding where you’re at, where you need to be and what goes into your credit score. Start by pulling a copy of your credit report; there are plenty of free options where you can get a copy of your report.

One of the most popular free options is Generally, the site allows one free report annually, but in response to the effects of COVID-19, you can get a free report every single week between now and April of 2021. The site does allow you to pull from all three reporting bureaus, which is advised.

2. Review your report and dispute any errors

The next step in how to repair your credit is reviewing your reports for any errors or discrepancies. According to a Federal Trade Commission (FTC) study, one in four consumers found an error on their credit reports. If you have an error in your report, your credit score may be unfairly low.

If you find a discrepancy, file a dispute with the reporting bureau immediately. In the same FTC study, four out of five people who reported a discrepancy receive some sort of modification to their credit report.

What happens after a dispute?

According to credit reporting bureau Experian, most disputes are completed within 10 to 14 business days after they’re reported, but often much more quickly. The Fair Credit Reporting Act (FCRA) requires disputes to be addressed in no longer than 30 days.

Once the discrepancy is corrected, you may see changes to your score almost immediately. Even though the bureaus are required to handle discrepancies in under 30 days, you should still make it a habit to follow up and double-check your report to make sure things are corrected appropriately.

3. Make a payment plan

Often, it can be confusing to know where to start when your credit is in need of repair. The best course of action is to lay out a payment plan to tackle debt that takes into account your current income, debt obligations and past-due balances.

It’s always smart to start by catching up on your past-due balances. As late payments get later, the effect on your credit score increases. Once you’ve accounted for these instances, make a plan that covers at least the minimum balances on all of your debt. If you need to contact your debt holders to work out special arrangements to keep up, do it. There’s no penalty on your credit report for making arrangements with your creditor.

If you have extra money that you can put toward your debt, you have two options: The most fiscally responsible plan is to start with the debt that is the most expensive, but many people like to start with smaller accounts to get them closed and then focus on the larger accounts.

4. Establish a positive credit history

The good news is that no matter which method you choose, your on-time payments will demonstrate good borrowing behavior and an attempt to pay down your debt. These two factors combined will help your credit score to recover. On top of that, time is on your side; as time passes, the age of your credit accounts will get longer, in turn helping your score.

At this point, you have some additional options you can employ to help build your credit score. First, you can take advantage of balance transfer credit cards to lower your interest rate for the length of the promotional period. While opening the new account may temporarily lower your credit score, the interest savings that can be applied to the principal balance will have a long-term, net-positive effect on your credit. Remember, contrary to what some credit repair services may claim, good credit does take time.

A second option that may help with credit repair is opening a new line of credit — even if there is no balance transfer incentive. While the new account will have the same temporary score lowering effect, it will raise your overall available credit. What this does is lower the percentage of your credit utilization. Basically, the more credit you have access to that you’re not using, the better it looks to creditors. With a FICO credit score, credit utilization is part of the amounts owed category, which makes up 30 percent of your overall score.

5. Seek out credit counseling to discuss your options

If you’re still confused or having trouble with your debt payoff, there is nothing wrong with asking for a little help from a professional. Credit counseling services exist to help people just like you determine the best course of action to get their financial health back on track.

Sometimes it can be as simple as driving home the points already covered in this credit repair guide; in other instances, it might be something more extreme, like filing for bankruptcy. It all depends on where you’re at, what your goals are and what you need to do in order to get there.

When searching for help, look for credit counselors. You’ll want to stay away from debt settlement companies that will advise you to stop paying completely on your accounts, which can make the situation worse. Be careful, though, because some debt settlement companies operate under the guise of credit counselors.

The best way to know you’re working with a reputable credit counselor is to ask what their plan for you entails. If it involves not paying on debt and paying their company instead, you’ll want to find another service provider. But if the counselors advise plans similar to what has been mentioned here, chances are the company has your best interests at heart.

Bottom line

While building your credit back up can seem like a daunting task, there is light at the end of the tunnel. By continuously implementing responsible financial practices over and over again, you can start to rebuild your score. You may see some results quickly, but the full credit repair process may take months or years, depending on where you’re starting from. Remember, though, focus on good habits from here on out to protect the gains you make so you don’t ever have to look into how to repair your credit again.

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If you need a co-signer, you’re not ready | Business



My fiancée and I want to make an offer on a house. She has a lot of late payments and a bad credit record, though, but she is working hard to manage her money better and get out of debt. I don’t make enough money to get a home loan by myself, and I have some debt to pay off, too. In order to help us out, my aunt and uncle said they are willing to co-sign a mortgage loan for us. What do you think of that idea?

Here’s a simple, solid piece of advice for anyone looking to make a purchase of any kind. If you need a co-signer, you’re not ready to make that purchase—period. I’m not trying to beat you up or anything, but it’s way too soon for you two to be thinking about buying a home. I mean, for starters you’re just engaged right now.

When a lender requires a co-signer, it basically means they don’t believe you’ll pay back the money. And besides, you two don’t need a house now or right after you get married. The two of you should get married, and live in a decent, inexpensive apartment for a while. During that time, you both need to work hard on paying off all your debt. After that, save up an emergency fund of three to six months of expenses. Then, start setting aside cash for a down payment on a modest home.

When it comes time to buy a home, I recommend a 15-year, fixed rate loan with a down payment of at least 10%. Twenty% is better, because it will help you avoid having to pay PMI (private mortgage insurance). Make sure the monthly payments on the loan are no more than 25% of your combined take home pay. Keeping the payments at 25% or below will make it easier to address other important financial issues, like saving and investing.

Your aunt and uncle are obviously generous people, Evan, but they’re a little misguided in their offer. At this point, helping you two buy a house — something you obviously can’t afford —would be a huge burden instead of a blessing.

Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Follow Dave on Twitter at @DaveRamsey and on the web at

Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Follow Dave on Twitter at @DaveRamsey and on the web at


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Dave says: If you need a cosigner, you're not ready – Northeast Mississippi Daily Journal



Dave says: If you need a cosigner, you’re not ready  Northeast Mississippi Daily Journal

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How to improve your credit score in 2021: Easy and effective tips



If you’ve ever wondered “What is my credit score?” it’s probably time to find out. Having a good credit score can make life a lot more affordable. If you’re about to buy a house or car, for example, the higher your credit score is, the lower your interest rate (and therefore, monthly cost) will probably be.

Your number may also be the deciding factor for whether or not you can get a loan and ultimately determine if you are even able to buy something you want or need.

So, yes, the goal is to have the highest possible credit score you can, but increasing the number doesn’t just happen overnight. There are important steps to take if you want to increase your score, and the sooner you start working on it, the better.

“If you’re trying to increase (your credit score) substantially to accomplish a goal, you’re really going to have to have as much lead time as possible,” said Thomas Nitzsche, director of media and brand at Money Management International, a nonprofit financial counseling and education provider that advises people on how to legally and ethically improve their credit score on their own.

If you have fair credit and you’re trying to improve the number for a house purchase, for instance, you’ll want to start working on it at least a year in advance, he explained to TMRW.

But even though that sounds like a long time away, you can (and should!) start doing things right now to bump that number up. Below, see seven things you should do — and not do — to help improve your credit score:

1. Review your credit report

Review your credit report and look for errors that might be hurting your score. Morsa Images / Getty Images

The first thing you’ll want to do is pull up a copy of your current report so you know where you stand. You can get free reports from all three agencies — TransUnion, Experian, and Equifax — at Nitzsche said it’s important to take a moment and understand the financial snapshot of where you are today and where you want to be.

You’ll also want to take some time and look for any errors on your report, which could negatively impact your score. “If your name is misspelled, that’s not going to hurt your score,” he explained. “But if you see a late payment or missed payment (that’s in error), or maybe you have an account that should be reporting but isn’t, then that’s a problem and that will impact your score.”

If there is an error, you should dispute it and try to provide as much proof as you can.

One other thing: You can also ask a creditor to remove an issue if it’s been corrected (i.e., if you paid off a collection debt). Nitzsche said it doesn’t hurt to ask and the worst thing they could say is no.

2. Have good financial habits

“The biggest part of your credit score is payment history, so the most critical thing is never missing a due date,” Nitzsche said. Set up a monthly autopay or add all due dates to your calendar so you never miss a bill.

You can also achieve a higher score when you mix different types of accounts on your credit report. It may seem counterintuitive to get extra points for having debt in the form of student loans, mortgages and auto loans, but as long as you’re paying them off responsibly, it shows that you’re reliable.

3. Aim to use 30% or less of your credit at any given time

Know your credit limit and aim to only use 30% or less of it for a better credit score.Tim Robberts / Getty Images

Know your credit card limit, and try not to use any more than 30% of that number each month, otherwise your score could lose points for too much credit utilization.

Another thing you can do is ask your bank to increase your limit. “That will give you more flexibility to spend more,” Nitzsche said. You could also pay it off twice a month to keep the balance low. But he does warn that you never know when the balance is going to be reported to the bureau. It can happen at any point during the month, so it might be the day after you make the payment or the day before. “You don’t necessarily want to use the card and pay it the next day because that doesn’t give the bureau the chance to know that you’re using it,” he said.

4. Avoid requests for new credit

If you’re looking to increase your score around the time you want to buy a house or car, you won’t want to open up a new line of credit, like a retail card, credit card or loan. That’s because “hard” credit inquiries like those can lower your score, and sometimes it comes down to a few points over whether you’re approved or what your rate will be, Nitzsche said.

“Soft” credit inquiries, like when an employer checks your credit or when you pull your own report, won’t affect your score.

5. Keep all accounts open, even ones you don’t use anymore

Even if you don’t use that credit card from college, it’s a good idea to just keep it open because closing it could hurt your score. Nitzsche explained that you’ll be dinged some points for each account that is closed. If you want or need to mentally break up with a card, just cut it up instead.

6. Build your credit if needed

If you haven’t established credit yet, you might not even exist … in the credit report space, that is! “If someone has never fallen in delinquency on any subscriptions or utilities or never had collections on anything and they have not utilized credit cards or loans in the past seven to 10 years, they may not have a credit profile at all,” Nitzsche said. “That presents a challenge when you want to buy a home.”

If this sounds familiar, you may have to get a secured credit card where you put down a deposit, he advised. “You still have to make payments and use it responsibly. Not all banks offer them but you can usually check with your local bank or credit union.”

7. Reach out for help

If you want personal guidance on boosting your credit score, make an appointment with a credit counselor.kate_sept2004 / Getty Images

There are many apps and credit-monitoring services that can help you stay on top of your credit score. You could also reach out to a professional credit counselor who can help you navigate your specific situation. (Here’s a good resource about finding a reputable service.)

One last thing: Nitzsche warned that everyone should beware of credit repair scams that claim to be able to increase credit scores for an advance fee to get accurate negative information removed (even temporarily) from credit reports.


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