Your credit standing is quite an important factor when you need funds. Unfortunately, it can deteriorate over time for several reasons, some of which happen unexpectedly.
When you have a poor credit score, it’s hard to secure approval from lenders. But fret not, you can still repair your credit.
Increasing Your Credit Score
When your credit score deteriorates, it’s not the end of the world. You can still take steps to improve your credit score, although it may take some time.
It’s even possible to reach a perfect credit score, but it’s a long-term commitment to being responsible and disciplined with your borrowing and spending habits.
Methods to increase your credit score
One common way is to increase your credit score by piggybacking. It means you can benefit from someone else’s good credit score by being an authorized user of their credit card.
A tradeline can also help increase your credit score, but it’s best to skip buying a tradeline. While it’s technically legal, it can be viewed as a misrepresentation of your creditworthiness.
Paying off your debt can also boost your credit score. If you’re sure that you can pay off your debt, a reaffirmation agreement with your lender will help build your credit. You can also keep your collateral (such as a car or house).
You can do a lot of things with good credit. A good credit score allows you to get approved on loans fast, get better terms on a loan or move into a new apartment quickly.
Removing Negative Items
Items such as overdue accounts can stay on your credit report even after you’ve settled your debts. When you’re trying to repair your credit, removing these negative items is the quickest way to improve your credit.
You can remove negative items from your credit report yourself. This does take quite a bit of research and negotiations with your creditor. If you’d rather leave it to a professional, there are plenty of credit repair specialists that offer help.
How much will your credit score improve?
How much your credit score will improve depends on the items you remove. For example, a deleted collection can boost your score by up to 150 points, or none at all if you still have other unpaid accounts in the collection.
Removing accounts that you’ve already settled
You can remove settled accounts from your credit report by requesting for a goodwill adjustment from your creditor. If the settled account remains on your credit report after 7 years from delinquency, you can file a dispute with the credit bureaus.
Evictions don’t end up on your credit report
If you faced eviction and your landlord filed a case against you or hired a collection agency, it may appear on your public record (not your credit report). You can still dispute eviction if you feel you’ve been treated unfairly.
Tax Debts and their effect on your credit
Unpaid taxes will also hit your credit score, so paying your tax debts will help repair your credit. You can also remove tax lien from your credit report after paying what you owe or negotiating a payment plan with the IRS.
Removing late payments from your report
So you’ve caught up with payments on an account, can you remove late payments from your credit report? Yes, you can if your lender agreed to it out of goodwill after you settled the payment, or if there’s inaccurate information in the entry.
Don’t worry about removing items that don’t impact your credit
Some items cannot be removed or it’s unnecessary because they don’t have much of an impact. For example, you can’t remove hard inquiries from your credit report.
You may also leave a bankruptcy on your credit report. It’s a common misconception that it will negatively affect your credit score while it’s there. The truth is that you can rebuild your credit as soon as you get discharged from your debts.
When your car has been repossessed, getting the record off your credit report isn’t easy. There’s also no guarantee that you’ll succeed at it. Check your options and see if it’s worth it to remove repossession from your credit report.
Credit Monitoring: Protect yourself from credit fraud or identity theft
Credit monitoring allows you to know of any changes on your credit record by sending you alerts via email or phone.
You can monitor your credit on your own or sign up for a credit monitoring service.
It’s important to review your credit report regularly to ensure that all entries there are accurate.
You’re entitled to one free credit report a year from the national credit bureaus (Experian, TransUnion, and Equifax), so take advantage of it!
If you suspect that you’ve been a victim of credit fraud or identity theft, you can freeze your credit report. It won’t affect your credit score, but you need to unfreeze your credit report later when you apply for a new loan or line of credit.
Dealing with Problems that come with Poor Credit
Poor credit scores can make your life more difficult than it should be.
If your creditworthiness is below average, you may find it hard to land a job, or even get approved for a cell phone.
Renting is one area that can be particularly tricky for people with lower credit scores. That’s because landlords often do credit checks when choosing tenants. Learn what credit score you need to rent an apartment or how to rent a house with evictions.
If you’re looking to buy a house rather than rent, you could look at a rent to own arrangement, which allows you to own a home even if your credit doesn’t qualify you for a mortgage.
Using Credit Builder Loans
A credit builder loan is another way to repair your credit standing. You can think of it as advanced savings where you have to make payments first before you can access the money.
Learn more about how you can get a credit builder loan and how it works. Also, check out the best credit builder loans available.
Reviews of Credit Repair Services
If you’re looking for other ways to build your credit, read some of our reviews: