Resolve Incorrect Information On Your Report
Incorrect information can appear on your report for the following five reasons:
- Someone stole your identity and opened new accounts in your name.
- Someone stole one of your existing accounts, and started using it.
- The bank made an error and reported a late payment or non-payment that never happened.
- A collection agency made an error and reported a collection item on debt that was never yours.
- Your name and identifying information has been mixed up with someone else .
If someone stole your identity
Incorrect information due to identity theft is a serious issue that you need to resolve as soon as possible. These are some common signs of identity theft:
- You dont get your bills or other mail because someone has changed the mailing address on your accounts.
- Debt collectors call you about debts that arent yours.
- Medical providers bill you for services you didnt use.
- Your health plan rejects your legitimate medical claims because records show youve reached your benefits limit.
- The IRS notifies you that more than one tax return was filed in your name.
- You are arrested for a crime someone else allegedly committed in your name.
Warning: A common form of identity theft is when a family member steals your Social Security Number and uses it to apply for credit.
Below we detail some important action items you can take.
Check Your Credit Report And Score
If you want to increase a low credit score, the first step is to look at your credit report and review it for accuracy. Throughout the pandemic, you can access free weekly online credit reports from the three bureaus by going to AnnualCreditReport.com. You can also get up to six free credit reports through 2026 from Equifax.
It’s important to get your credit report from all three credit reporting agencies. Checking your own credit score is a soft hit on your credit and will not impact your score.
Get A Secured Credit Card
This product is typically for people who want to build credit from scratch. If your credit card accounts have been closed, you may need to start over with a secured credit card. These cards require a deposit upfront. That deposit is typically your credit limit, but then they work like any other credit card. Choose one from an issuer that reports payments to all three major credit-reporting bureaus.
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Quick Ways To Fix Your Credit Score
Why do I have a bad credit score to begin with?
- Lack of financial management this includes any negative or neglectful financial behaviour, such as:
- Not paying bills on time or not paying at all
- Missing on loan repayments
- Having your home foreclosed
- Any court judgment on financial payments
What are the consequences of a low credit score?
- You might not be approved for credit or loans
- It could be difficult to get approved for a mortgage
- You may have to pay higher interest rates for loans
- Loan applications to start a business could be denied
- It may be hard to finance the purchase of a new car
- Utility and telco providers may not accept your application to switch to them
- Your applications to rent property, whether residential or for business, could be denied
So, how can you fix your credit score?
How Can You Get A Hold Of Your Credit Score
Before learning how to repair your credit score, you must know where to get it first. You can get your credit score in different ways either free or paid:
- Annual Report via AnnualCreditReport.com on this site, you can get a free copy of your credit report every three months from the three main credit bureaus. Be wary of fake sites. The legitimate site only asks for your personal information before generating the free credit report.
- Sign Up for Credit Reporting Companies you can also get free monthly reports by signing up on each of the credit bureaus websites. For instance, Experian offers six free reports each year when you create an account with them.
- Turned Down Credit Request you can get a free credit report if your credit application is declined by a lender, who will include the report with the rejection notice it will send you.
If youre ready to find out how to fix your credit score in 2021, read the following steps and implement them in your financial strategies.
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Limit Your Number Of Credit Applications Or Credit Checks
Its normal and expected that you’ll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, its recorded as an inquiry. Inquiries are also known as credit checks.
If there are too many credit checks in your credit report, lenders may think that youre:
- urgently seeking credit
- trying to live beyond your means
Reduce The Amount Of Debt You Owe
Your , or the balance of your debt to available credit, contributes 30% to a FICO Score’s calculation. It can be easier to clean up than payment history, but it requires financial discipline and understanding the tips below.
Keep balances low on credit cards and other revolving credit: high outstanding debt can negatively affect a credit score.
Pay off debt rather than moving it around: the most effective way to improve your credit scores in this area is by paying down your revolving debt. In fact, owing the same amount but having fewer open accounts may lower your scores. Come up with a payment plan that puts most of your payment budget towards the highest interest cards first, while maintaining minimum payments on your other accounts.
Don’t close unused credit cards as a short-term strategy to raise your scores.
Don’t open several new credit cards you don’t need to increase your available credit: this approach could backfire and actually lower your credit scores.
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Hard Hits Versus Soft Hits
Hard hits are credit checks that appear in your credit report and count toward your credit score. Anyone who views your credit report will see these inquiries.
Examples of hard hits include:
- an application for a credit card
- some rental applications
- some employment applications
Soft hits are credit checks that appear in your credit report but only you can see them. These credit checks don’t affect your credit score in any way.
Examples of soft hits include:
- requesting your own credit report
- businesses asking for your credit report to update their records about an existing account you have with them
Reporting Accurate Negative Information
When negative information in your report is accurate, only time can make it go away. A credit reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. The seven-year reporting period starts from the date the event took place. There is no time limit on reporting information about criminal convictions information reported in response to your application for a job that pays more than $75,000 a year and information reported because youve applied for more than $150,000 worth of credit or life insurance.
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The Bottom Line: Take Control Of Repairing Your Credit Score
The best route to a better credit score when looking into a home loan? First, know what makes a good credit score, which is a range between 670 739. Then, know what makes up your score, including payment history, current loan and credit card debt, length of credit history, credit account diversification and recent activity.
As we covered earlier, you can improve your credit score by taking the following actions or any combination of steps:
Theres no quick fix that will fix your credit to buy a house overnight. However, there are plenty of small steps you can take every day that will lead to a better score over time.
Ready to get started on your home search? Check out more premortgage tips recommended to ensure the process goes smoothly! If you have additional questions, its important to work with a financial advisor before making any big financial moves.
Take the first step toward the right mortgage.
Apply online for expert recommendations with real interest rates and payments.
Get Credit For Rent And Utility Payments
Rent reporting services can add your on-time rent payments to your credit reports. Rent payments are not considered by every scoring model VantageScores include them but FICO 8 does not, for example. Even so, if a would-be creditor looks at your reports, rent records will be there, and a long record of consistent payments can only help.
Experian Boost also can help, but in a more limited way. You link bank accounts to the free Boost service, which then scans for payments to streaming services and phone and utility bills. You choose which payments you want added to your Experian credit report. If a creditor pulls your FICO 8 using Experian data, you get the benefit of that additional payment history.
Time commitment: Low. After initial setup, no additional time is needed.
How fast it could work: Boost works instantly rent reporting varies, with some services offering an instant “lookback” of the past two years of payments. Without that, it could take some months to build a record of on-time payments.
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Get A Copy Of Your Report
First, you need to get your report from the reporting agencies. There are three credit bureaus in the U.S. Experian, Equifax and TransUnion. Each maintains their own proprietary copy of your report. So, you actually have three reports instead of just one.
You can download one, two or all three reports through a federally-mandated free website: annualcreditreport.com. If youve never checked your credit report, its best to do all three at first to make sure your profile is as clean as possible. However, if you repair your credit regularly, you may choose to do just one at a time.
To get your reports, you just need to answer a few security questions to verify your identity. Then the portal will direct you to the right place to download your reports from each bureau. You can complete this step in about 15 minutes.
If you prefer hard copies, you can send a letter or request it by phone:
Mail to: Annual Credit Report Request Service, P.O. Box 105281 Atlanta, GA 30348-5281 Phone: 877-322-8228
Improve Your Payment History
Your payment history is the most important component of FICO® scoring models. Late and missed payments will reduce your credit scores, and bankruptcies and collections can cause significant damage. This negative information will remain on your credit report and impact your credit scores for seven to 10 years.
Your scores often take into account the size of your debt and the timing of your missed payments. The bigger your debt is, and the more recent your missed payments are, the worse your score will be, typically. Bringing accounts current and continuing to pay on time will almost always have a positive impact on your credit scores.
Should You Use A Credit Repair Company
Legitimate credit repair companies can help you remove credit-damaging mistakes from your credit report. However, theres nothing a credit repair company can legitimately do for you that you cant do on your own. Why pay someone you dont know to repair your credit when you can do it yourself for free?
Remember, no company can remove negative information which is accurately reported on your credit report. Only incorrectly reported information can be removed from your credit report, and thats something you can do on your own.
If youre overwhelmed by the credit repair process or dont have the time to do it yourself, hiring a reputable credit repair service may be worth considering. Keep in mind, reputable agencies do exist, but many credit repair companies are scams. Look out for red flags of illegal practices, including asking for money upfront before working on your behalf or failing to disclose your legal rights when they explain what they can do for you.
Consider A Balance Transfer Card
If you’re swimming in credit card interest, one possible solution is moving your balances to a low- or no-interest balance transfer credit card. Balance transfer credit cards typically offer 0% introductory APRs for 12 to 24 months. This lets you consolidate high-interest credit card debt onto one card, combining your payments and saving you in interest. Before applying for a balance transfer card, make sure you can afford to repay your debt within the introductory period — otherwise you may find yourself right back where you started.
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Errors By The Credit Provider
A credit provider may have reported information wrongly. For example, they:
- incorrectly listed that a payment of $150 or more was overdue by 60 days or more
- did not notify you about an unpaid debt
- listed a default while you were in dispute about it
- didn’t show that they had agreed to put a payment plan in place or change the contract terms
- created an account by mistake or as a result of identity theft
To fix this kind of error:
- Contact the credit provider and ask them to get the incorrect listing removed.
- If the credit provider agrees it’s wrong, they’ll ask the credit reporting agency to remove it from your credit report.
If you can’t reach an agreement, contact the Australian Financial Complaints Authority to make a complaint and get free, independent dispute resolution.
If you’re struggling to get something fixed, you can contact a free financial counsellor for help.
Avoid Closing Old Credit Cards
If you’ve paid off a credit card and don’t plan to use it, you may think that closing the account is the right move. Actually, closing old credit cards can lower your credit score even more. Credit history length accounts for 15% of your credit score, and the longer your credit history, the better.
Instead, cut up the old cards so you aren’t tempted to use them again. You can’t control if a card issuer closes the card, and after a certain inactive period, the issuer may close the account. If your credit card has an annual fee, it may be a good idea to close the account if you don’t plan to use it again.
Loan Balances And Your Credit Score
Your loan balances also affect your credit score in a similar way. The credit score calculation compares your loan current loan balance to the original loan amount. The closer your loan balances are to the original amount you borrowed, the more it hurts your credit score. Focus first on paying down credit card balances because they have a greater impact on your credit score.
How Long Will It Take To Rebuild My Credit
Credit missteps and misfortunes do eventually fade into the past. The impact on your credit score and the time it takes to recover depends partly on how big the mistake was and how recent. Late and missed payments, judgments and collections stay on your credit reports for seven years. Bankruptcy can linger for up to 10 years.
However, you can begin repairing things right away. You should begin to see improvement as soon as you start accumulating positive credit information to help counter the big negatives. In time and as your credit score grows, you’ll be able to consider new credit offerings that offer rewards and incentives to users.
Pick whatever strategy or combination of strategies works for your situation, then monitor the results. You can get a free credit score from NerdWallet. It updates weekly and allows you to see your credit score over time. You can check it to see how your efforts are paying off.
If your score is low, you can quickly build it up again by paying cards more than once a month or disputing credit report errors. Be wary of companies that promise quick fixes or ask you to get a as a path to fresh credit.
Your score can start to recover as soon as you start adding positive credit information to help counter the negatives you have on your credit reports.
About the author:Bev O’Shea writes about credit for NerdWallet. Her work has appeared in the New York Times, Washington Post, MarketWatch and elsewhere.Read more
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Add To Your Credit Mix
An additional credit account in good standing may help your credit, particularly if it is a type of credit you don’t already have.
If you have only credit cards, consider getting a loan a can be a low-cost option. Check that the loan you’re considering adding reports to all three credit bureaus.
If you have only loans or have few credit cards, a new credit card may help. In addition to improving credit mix, it can reduce your overall credit utilization by providing more available credit.
Impact: Varies. Opening a loan account is likeliest to help someone with only credit cards and vice versa. And there’s more potential gain for people with few accounts or short credit histories.
Time commitment: Medium. Consider whether the time spent researching providers and applying is worth the potential lift to your score. Weigh what you’d pay in interest and fees, too, if you’re getting a loan or card strictly to improve your credit.
How fast it could work: Fast. As soon as the new account’s activity is reported to the credit bureaus, it can start to benefit you.
Someone with a low score is better positioned to quickly make gains than someone with a strong credit history. Paying bills on time and using less of your available credit limit on cards can raise your credit in as little as 30 days.