DIY Credit Repair | 10 Credit Repair Tips

DIY Credit Repair

When I was 17, for some strange reason I was approved by a local apartment complex to rent a 1 bedroom apartment. My first shot at adulthood, I was moving in with my girlfriend. I had an unreliable job, no financial education, and was still figuring life out.  In hindsight that was a train wreck waiting to happen, but it was learning experience. After a few months I was laid off from my job, lost the apartment, and had utility bills that had no chance of getting paid. Unfortunately while we are young, is when we do the most damage to our credit, as we incur bills and student loans that can effect our credit.  As maturity sets in, and we realize how useful credit can be, and thus we embark on the journey to credit repair.

Why do we need good credit?

Credit is your financial responsibility track record, its how companies determine whether your business is a liability to them. People with better credit get better opportunities, better rates, and more financial options.  Your credit determines how much your insurance premium is, if you can rent that nice apartment that you’ve had your eye on, the car you can afford, and if you ever have plans to buy your own home, or start investing you will need to get your credit in decent shape. Your credit is even the determining factor. People with bad credit are looked at as risky and unreliable. Fortunately we can redeem ourselves, here are some DIY credit repair tips!



DIY CREDIT REPAIR TIPS

  1. Know Your Credit Score – Because how would you know what needs fixing without taking a look under the hood right. Fortunately, obtaining your credit score these days is easy as its ever been. Head over to CreditKarma.com sign up and get direct access to your credit info. Credit Karma is great because its FREE. After you sign up download the app, to your cell phone. You CARE about your credit now, lets keep it close
  2. Fix Errors – Now that we have access to our report, checking the collections for errors is important. Sometimes creditors make mistakes at your expense, and its up to you to find out. These need to be disputed right away. You can dispute errors directly though credit karma.
  3. Dispute Everything – Disputing derogatory credit remarks on your report is easy and doesn’t cost any money so, it makes since to try them all and see what sticks. When you dispute derrogatory credit marks, the creditor has to prove that you owe them money within 30 days. When your late payment goes in to collections, if you haven’t paid in a while, the original creditor sells your debt to a debt collection company. This company tries then tries to collect the debt from you, if you don’t pay them, eventually they liquidate your account to another debt collector, and the process repeats. Alot of times after a few debt transfers, it makes it difficult for the new creditors to get the necessary info to respond to your dispute. The result is one less negative mark on your credit report.
  4. Don’t Pay Old Debts – Debt falls of your credit report after 7 years, anything over 5 year or older you may just want to wait out. There’s no sense in spending money that could be applied to more recent debt. Anything less than 5 years, you should consider paying off. Depending on the amount owed, set aside a reasonable amount to pay off your debts on a consistent basis. Here is a debt repayment calculator!
  5. Pay Bills On Time – Your not the same irresponsible 19 year old with your first visa any more, time to pay your bills when or before the due date. Part of your credit report is how well you are able to pay your debts on time. Each month credit bureaus document weather you paid on time or not. By making sure that you stay on top of this you will notice a rise in your credit. If you have a problem with time management, set alerts on your phone.
  6. Get A Secured Credit Card – Secured credit cards are like regular credit cards with a major exception. You will need to put a deposit down, usually a minimum of $200, which represents your credit limit. Technically is more like a debit card, but should be treated as a regular credit card. This card SHOULD NOT be used for anything other than a credit boosting tool, not because you need an outfit to wear to the club. I recommend paying for something low like a cell phone bill, or something that you need to pay for consistently  with your secured card. Don’t exceed 30% of your credit limit, and pay this balance of every month, and your score will definitely rise.
  7. Never Exceed 30% Credit Utilization – This is one of the high ranking credit factors, and a very important part of DIY credit repair. Creditors don’t like when you max out your credit cars. A good rule of thumb is not to exceed 30%. This is the perfect range to be in. It shows creditors, that you are responsible, and that you are conscious of your spending.
  8. Maintain Credit Activity – Another high ranking factor in credit repair, is the length of your credit history. You want to keep cards open as long as possible. A halt in utilization for extended periods of time can get your card closed. Always charge at least one thing to each card every month, and pay off the balances when possible.
  9. Negotiate – When you get ready to start paying off recent debt, reach out to the debt collection companies and negotiate a deal. The older your debt gets, the more flexibility you have. Let creditors know that you want to pay off your debt and offer them 30% of the debt. Sometimes they will say yes, if not almost all the time they will give you a counter offer. Try to get the lowest amount possible. When your offer is accepted, make sure to confirm that they will be removing the marks from your credit report as this is not automatic. Get all of this in writing, and store it in a safe place.
  10. Avoid Excessive Credit Checks – STOP LETTING PEOPLE RUN YOUR CREDIT!!!! Salesmen, will often downplay the effects of inquiries but the truth is they don’t care. You need to be firm with people who wish to run your credit. Excessive inquires look bad on your credit report and reduce your score. Only allow credit checks with absolutely necessary.




Things Credit Repair Will Help You Achieve

  • Able to qualify for a mortgage. Unless you are exceptionally financially well off, you are going to want to finance your home. People with good credit have no problems getting qualified for mortgages.
  • Able to finance rental properties. Thinking about investing to earn yourself some passive income?. Good credit will help you to get loans on these properties.
  • Get approved for credit cards. No surprise that credit card companies are going to do a credit check before they trust you with any credit.
  • Lease an apartment. As a landlord I can tell your credit is a major clue about your financial habits. Most landlords like to see that you can be trusted to pay your debts on time.
  • Able to finance a car. You gotta get around right? An obviously something reliable. If you want to rent a car and your credit is bad, the salesmen will politely ask you to come back when your a little more fiscally responsible.
  • Get you lower interest rates. Ever seen one of those car commercials, where they give a low monthly price and then at the bottom of the screen you see the fine print? That fine print says that those super low prices you just saw only apply to those with preferred credit. Lower interest rates means you save more money then those with bad credit.
  • Give you higher limits. When applying for credit cards, your limits are determined by your credit score. Higher credit results in higher limits. When credit card companies issue credit cars, they know if your responsible with money when they see your credit score.

Subscribe to our mailing list for more freebies and financial life hacks 🙂

* indicates required


Comments

  1. It is amazing all things our credit score is used for today including insurance, utilities, etc etc. Very important to stay on top of your score. I like how credit cards lately have been offering to provide your score free allowing you to actively monitor it online through the credit card portal. That, along with regular checks of what is actually showing up on my credit report is how I stay on top of my credit.

    Thanks for the post!

  2. […] and assist with problem solving issues. Its a great way to stack up your cash for investments, pay off your credit card debt, or just save up for the holidays. Scheduling is very […]

Leave a Reply

Or

Required fields are marked*

CommentLuv badge