A poor credit report can make your financial life difficult. Unfortunately, there is no easy fix when it comes to improving your credit report. You will need to develop healthier spending habits and learn to manage your finances better. While you cannot erase negative information from your credit report that is accurate, you can take steps to improve your credit report within just three months. Although it takes time to repair a credit card, it is possible to begin seeing some improvement on your credit score in three months.
Keep in mind that the only legitimate way to repair your credit is to do it yourself. Do not fall victim to services that charge a fee for helping you. Credit help services often claim that they can improve your credit report and even remove negative information. Maxine Sweet, public education specialist for the Experian Credit Reporting Agency, warns consumers that they can repair their credit on their own and that companies charging a fee to remove negative accounts are usually scams.
Order a copy of your credit report and take a careful look at it (see Resources). It is not uncommon for inaccurate information to be reported. For example, an account that has been paid in full might be listed as delinquent. Another inaccuracy that appears frequently on credit reports is an outstanding balance listed for a credit account that has since been paid in full. Highlight any information on your credit report that you think is incorrect.
Submit a dispute for any information on your credit report that you know is inaccurate. Gather all supporting documents you have to prove your point. Look for letters from creditors that state your account was paid in full, in addition to payment receipts or bank account statements showing payments were made. The credit-reporting agency is responsible for investigating disputes. If the agency finds in your favor, the inaccurate details will be removed from your account.
Pay every bill that you have on time each month. Never pay less than the minimum payment due or your account will still be labeled as delinquent. Making payment on a balance earlier in the month can decrease how much you pay in interest or finance charges. Paying before the next billing date can decrease the amount a creditor reports to the credit-reporting agency that month, which may help to raise your score.
Contact creditors to make payment arrangements for accounts that are delinquent or those that have been charged off. Ask if your payoff amount or payment arrangement can be accepted as payment in full. Some creditors are willing to update your credit report to reflect payment as being made in full if you agree to a reasonable payoff arrangement. Most creditors are willing to negotiate a payment amount you can realistically afford to pay.
Apply any extra cash you have to credit cards that are at or near their spending limits. When you max out your credit cards, it reflects poorly on both your credit report and credit score. Pay down on some of the credit cards with the highest balances to free up some of your available credit. Creditors are keenly interested in how much of your available credit you actually use. You can use your credit card accounts regularly, but do not charge more than 30 percent of the available limit.
Make every effort to improve your credit report before considering credit counseling services or bankruptcy. Rely on options such as credit counseling services or filing bankruptcy only as last resorts.