Credit improvement services offer expert assistance in reviewing your credit report and disputing errors with the agencies. They may even offer to negotiate with lenders on your behalf. But as tempting as this seems, not all companies that offer to clean up your score are legitimate—sometimes, they may not deliver the results they promise. 

If you’re considering hiring a credit score improvement agency, you must fully understand what these companies offer and review their claims thoroughly for legitimacy. 

In this article, we’ll explain what credit score improvement services do and explore five popular options that could assist with your score cleanup. We’ll also share a reliable alternative that empowers you to build your credit responsibly. 

What Is a Credit Score Improvement Service?

A credit improvement service primarily focuses on addressing negative or inaccurate items on your credit reports and assists you in disputing and correcting them. They may also identify outdated data that may be causing your score to stop growing or dip. Improvement services, also known as repair or cleanup services, can:

• Review your credit report for errors
• Dispute incorrect information with the major credit bureaus
• Appeal to creditors to remove negative or derogatory remarks from your report

While credit improvement services may be helpful for users with a damaged score or negative items on their reports, they’re not a magic solution. These companies cannot remove legitimate negative information from your report or fabricate a credit history for you out of thin air.

Any credit score cleanup service claiming to be able to do this is likely a scam.

How Does a Credit Improvement Service Differ From a Credit Building Service?

Credit improvement services and credit building services are both focused on helping improve your creditworthiness; however, they have different operating methods. 

A credit building app or company helps you establish or build a positive credit history by reporting your on-time payments and responsible financial behaviors. They may provide credit builder loans or secured credit cards or offer tools to monitor your credit score or track your progress.

Credit score improvement services focus on disputing errors and negative remarks on your report and, in some cases, helping to remove inaccurate ones. 

The table below summarizes the key differences:

Pros and Cons of Credit Repair—What To Know Before You Begin

Working with a credit repair service could have its benefits, but it also has significant downsides. The section below explores both sides of the coin to help you make an informed decision.

Pros of Using a Credit Improvement Service

These are the benefits you stand to gain when you engage with a credit repair service:

• Potential quick results—They may be able to fast-track your credit repair process since they have trained professionals who handle similar situations frequently. They are efficient in spotting errors and resolving credit issues that you may have spent time fixing yourself
• Your report is expertly analyzed—Improvement services thoroughly review your credit report to pinpoint potential causes of your low score. The service digs deep to uncover valuable insight into the cause of your credit issues 
• Your score may increase—Credit repair may help boost your score if you combine it with other positive credit building habits. Cleaning up your credit score can lead to better financial deals and opportunities, too

Cons of Using a Credit Repair Service

It’s important to carefully consider these downsides before you decide to work with a credit repair company:

• Results are not guaranteed—A credit repair does not guarantee that your credit score will increase or meet your desired range. There are no specific guaranteed outcomes to using an improvement service. You will not shoot up from bad credit to an excellent one, and, in some cases, there may be no changes at all
• Fees are often high—Credit score improvement services often charge fees, depending on the type of service you need. It begins with an initial setup fee that ranges from $19 to $200, then a monthly subscription of $50 to $150. Other fees may cover ongoing credit monitoring, identity theft monitoring, and dark web monitoring
• Some credit repair services are scams—Some fraudulent companies take advantage of people in vulnerable financial positions and deceptively promise to help them improve their credit. They may convince unsuspecting victims to engage in illegal activities or pay exorbitant upfront fees

If you’re considering using a credit repair service, remember to approach with caution and carefully review them before proceeding.

5 Companies That Help Improve Your Credit Score

The following credit score improvement companies may be able to help you repair your credit score:

1. Credit Saint
2. Lexington Law
3. CreditRepair.com
4. The Credit People
5. Credit Firm

Credit Saint

Credit Saint is a credit repair service that aims to help you improve your credit score by disputing inaccurate, outdated, or unverifiable information. It offers tiered service packages with varying levels of service and pricing, including:

• Credit Polish—The basic package challenges the three credit bureaus for a limited number of negative items on your report at $99.99 per month
• Credit Remodel—This mid-tier package is more aggressive in disputing errors and includes creditor interventions. It costs $109.99 per month 
• Clean Slate—The most aggressive of all packages costs $139.99 per month and is designed for people with more grievous credit issues

All the plans have an additional $99 initial working fee, except Clean Slate, which has a $195 fee. The plans also offer a 90-day money-back guarantee. 

Lexington Law

This is one of the largest law firms specializing in credit repair services in the U.S. The service begins by analyzing your credit report to identify inaccuracies or negative items, then starting a dispute as needed. Tools for tracking and monitoring your score for changes are also included. 

Lexington Law’s wide range of credit repair services includes: 

• Bureau Challenges and Disputes
• Credit Interventions
• Credit Score Improvement Analysis
• DebtHandler
• Inquiry Assist
• MoneySmart Alerts

The repair service offers a one-payment package billed monthly at $135.95. It sends an invoice at the end of each service period and bills every 30 days.

CreditRepair.com

CreditRepair.com has existed since 2012. It helps users dispute their credit reports and intervene with creditors. The company claims to have helped over 850,000 members with their credit, but results are not guaranteed. 

CreditRepair offers three main pricing plans, each with an additional first-work fee that costs as much as your selected plan. These plans include:

• Direct—$49.95 + $49.95 first payment 
• Standard—$69.95 + $69.95 first payment
• Advanced—$119.95 + $119.95 first payment

CreditRepair doesn’t offer a satisfaction guarantee, so you’re not entitled to a refund if you’re not pleased with its services. It’s also important to note that the company was recently named in a lawsuit by regulatory authorities like the Consumer Financial Protection Bureau (CFPB).

The Credit People

This company offers a more streamlined approach to its services and is focused on analyzing your credit, disputing errors, and offering personalized credit management to get you through the process. The Credit People disputes erroneous items on your credit report as often as needed and provides a monthly refreshed score report. The pricing is as follows:

• Standard—A basic plan with Unlimited Challenges, allowing you to pay as you go for $99 a month
• Premium—A more advanced plan that includes creditor interventions, escalated disputes, and validations for $119 per month
• Premium Flat Rate—Everything in the Premium plan but at a 6-month flat rate of $599

The company claims to be able to boost your score by up to 50–100 points and allows you to cancel your plan at any time without charge if you’re unhappy with the service.

Credit Firm

This is a long-standing credit repair company with a straightforward approach to their services. Credit Firm begins by reviewing your report and then disputing errors and challenging negative items on it. It doesn’t charge a setup fee like its competitors and offers one all-inclusive plan that caters to all your repair needs. 

For an individual account, you pay $49.99 per month, while combined accounts (couples, two individuals) pay $89.99 monthly. There are no hidden fees or additional charges, making it a budget-friendly option. 

Credit Firm focuses primarily on dispute processing, so it’s not the best choice if you’re looking for other credit repair assistance. Note that it’s also not a Better Business Bureau (BBB) accredited company. 

Signs That a Credit Score Improvement Agency Is a Scam 

Certain signs can indicate that a credit repair company may be a scam. According to the Consumer Financial Protection Bureau (CFPB), these signs include:

• Asking for upfront fees before providing services
• Claiming to be able to remove all negative information from your report, even accurate and up-to-date remarks
• Encouraging you to dispute accurate information on your report
• Discouraging you from contacting the credit bureau yourself
• Failing to provide a written contract with details of their services and costs
• Failing to inform you of your rights, such as your right to cancel your contract with the company after three days at no charge
• Telling you to waive your Credit Repair Organizations Act (CROA) rights
• Offering you a new credit profile or identity

When it comes to repairing your credit, there’s no quick fix. It takes patience and consistent positive credit habits. Be wary of any company promising complete improvement guarantees or using high-pressure sales tactics to get you to sign up.

Tips for Improving Your Credit Responsibly

After a credit score cleanup, you still need to practice responsible borrowing habits to maintain your score or cause it to increase. You’ll find the following tips useful:

1. Keep an eye on your payment history—Your payment history accounts for 35% of your FICO^® Score, so skipping a payment impacts your score significantly. Always make on-time payments, never skip a bill even if it’s in dispute, and set up electronic alerts to remind you of due payments 
2. Use your credit wisely—Make an effort to stay within your credit limit and, if possible, use less than 30% of your available limit. A low credit utilization rate can boost your score
3. Improve your credit history—The older your credit account is, the better it is for your score. Keep your old accounts open, even if they’re no longer in use
4. Avoid triggering hard inquiries—A hard inquiry on your credit report can ding your credit score mildly, but multiple hard inquiries at a time can significantly lower your score. If you’re rate-shopping, try to keep your applications within 30 days so that bureaus will treat your inquiries as a single inquiry, mitigating its effects on your score

Should You Use a Credit Repair Service?

While credit repair services may seem like a quick fix for improving your credit, they may not always be the best solution for several reasons:

• They often make false promises of rapid credit improvement and even demand significant upfront payments for services you can likely perform yourself. You could spend a lot of money with very minimal results
• These agencies are considered unethical and illegal to operate in some states, such as Georgia. The lack of consistent regulation across all states is a red flag
• There are multiple free resources provided by The Federal Trade Commission to enable you to dispute inaccurate information on your report for free, without the aid of repair services. These services also claim to be able to remove accurate but negative information from your report when it’s impossible to do so

Instead of focusing on removing negative information from your report, a more effective long-term strategy is to build a positive credit history. 

Platforms like CreditStrong offer a more reliable approach that focuses on using your positive payment history and diversifying your credit mix to raise your score. CreditStrong is a sustainable solution that empowers you to build your credit profile consistently at a low cost.

CreditStrong—The Safest Way To Improve Your Credit 

CreditStrong by Austin Capital Bank is an effective solution for making positive changes in your credit score with the possibility of growing your savings simultaneously. It’s an FDIC-insured independent community bank that ensures absolute transparency by reporting your positive credit habits to the three major credit bureaus. 

Unlike credit repair services, CreditStrong doesn’t make unrealistic promises about removing negative credit history from your report. Instead, it empowers you to develop responsible financial and borrowing habits, enabling you to grow your credit with consistent on-time payments. It also doesn’t charge high up-front fees or require a minimum credit score to get started.

It’s suitable for everyone, whether you’re building your credit from the beginning or rebuilding after a financial hit.

How CreditStrong Accounts Build Credit

CreditStrong offers three main account types—Instal/CS Max, Revolv, and MAGNUM—designed to help you build credit hitch-free. The table below summarizes how they work:

Regardless of the type of account you choose, your payment history significantly affects your score increase, so making on-time payments is crucial to achieving your desired results.

Steps To Open Your CreditStrong Account

If you’re ready to begin, follow these steps to open a CreditStrong account:

1. Discover CreditStrong account options and get started here
2. Choose from the following products depending on your goals:
   • MAGNUM (from $30/month)
   • Revolv ($99/year)
   • Instal (from $28/month)
3. Submit the necessary information in the online application form
4. Monitor your progress via the dashboard

The post 5 Credit Score Improvement Services That Could Boost Your Credit appeared first on Credit Strong.

Failing to review your credit report and remove these inaccuracies or irrelevant information may affect your overall financial health and disqualify you from some premium opportunities. Having a healthy credit score is more than a financial achievement—it’s your gateway to better credit card deals, lower interest rates, convenient loan terms, and even housing options. 

In this article, we show you how to clean up your credit score and improve your score quickly after the cleanup.

Can You Erase Bad Credit?

Yes, you can do a credit score cleanup to remove inaccuracies from your account, but it’s not a process that can be achieved overnight. Fixing bad credit could take months of back and forth between credit companies and lenders to verify that the information on your account is false. It will take some time for them to respond to your disputes, and some may even require further information from you to validate your claims. 

Importantly, note that not all types of bad credit can be removed from your credit report. If the negative items or remarks on your report are legitimate and accurate, they can remain there for up to seven years before they’re deleted.

In some cases, you can petition the company to remove the negative information on your account by writing a goodwill letter to the creditor or negotiating a pay-for-delete term. 

What Does Cleaning Up Your Report Mean?

Cleaning up your credit score means identifying and correcting any inaccurate or outdated information on your credit report. This helps you to improve your score, encouraging lenders to consider you for loans with good terms. A good credit score positions you as a trusted potential borrower with commendable credit maintenance habits.

The three major credit reporting agencies in the U.S., Equifax, TransUnion, and Experian, have specific methods for disputing erroneous or inaccurate information. As you read further, you’ll find the processes for filing a dispute with each of them.

Why Should You Clean Up Your Credit?

Cleaning up your credit report has various financial benefits, a healthier score being one of them. A healthy credit score gives you access to: 

• Lower insurance premiums—Insurance companies review your insurance score based on the information that makes up your FICO^® credit score. If your credit score is low, your insurance score is likely low, too, meaning you’ll need to pay higher premiums. Cleaning up your report improves your score and qualifies you for lower premiums 
• Favorable loan terms—A clean report gives you a better chance of getting your loan approved. With a credit score of over 670 points, you get the best credit cards, higher loan amounts, longer repayment periods, and lower fees
• More employment opportunities—Some employers review your credit score as part of their hiring process. For instance, if you work in finance-related roles, bad credit may disqualify you from getting job offers. With better credit come increased job offers in sensitive roles
• Lower interests—Healthier scores indicate that your finances are in order and that you make on-time payments. This could encourage lenders to offer you lower interest rates, which make it less expensive to borrow credit
• Improved housing options—When you apply for a mortgage, lenders review your credit to see how you repay loans. Landlords also check your credit for your payment history when you want to rent an apartment. Good credit keeps them at ease and willing to offer you the housing of your choice 

How To Identify Errors on Your Credit Report

The Consumer Financial Protection Bureau has identified common errors that often appear in credit reports. They include:

• Identity errors—You may find errors in your personal information, including a wrong name, address, or phone number. There could also be information relating to another person with a similar name mixed into your file or erroneous details as a result of identity theft
• Incorrect account status—Your closed accounts may be presented as open on your report, or your payment may be incorrectly recorded as late or delinquent. The report may also list a debt more than once (with different names) or include a wrong payment date. It may list you as an account owner when you’re only an authorized user
• Data management and balance errors—Your report could contain negative information that should have been removed or list an incorrect current balance or credit limit

If you find errors like this on your account, use the appropriate cleanup steps to remove or rectify them. 

How To Clean Up Your Credit Score Yourself

Removing and rectifying errors on your credit report could take some time, so you must start early. Here’s how to clean up your credit score yourself in five consumer-friendly steps:

1. Request your credit report
2. Thoroughly examine your report
3. Dispute errors in your credit report
4. Settle pending debts
5. Use a credit repair service

Request Your Credit Report

Begin by requesting your credit reports from all major credit bureaus, including TransUnion, Equifax, and Experian. An easy way to get your report is to visit the Annual Credit Report website or call 1-877-322-8228. 

The three bureaus operate the site, which allows you to access your data for free once every 12 months. However, the bureaus do not share information among themselves, so your reports from each bureau may have slight variations.

To ensure your report stays accurate, space your requests throughout the year by requesting one from a different bureau every four months. 

For example:

• January—Request a report from Equifax
• May—Request a report from Experian
• September—Request a report from TransUnion

This approach allows you to keep an up-to-date understanding of your credit situation year-round and detect problems early. 

You can also order a report by mail from the same service and receive it within 15 days. Complete and print out the request form and then mail it to the following address:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

Thoroughly Examine Your Report

Once you receive your report, examine it thoroughly for the errors listed in the previous section, including account status, balance, identity, and data management errors. Pay attention to detecting incomplete and inaccurate information, too. 

Although removing errors from your report may help raise your score, not all types of errors affect your score. For example, a wrongly spelled middle name or an incorrect workplace will not cause your score to dip. 

Some errors could also cause your credit score to shoot up—for instance, having a well-managed credit account you don’t own on your report. It could give you a better debt-to-income ratio, causing your score to go up.

Derogatory remarks on your report (though accurate) could also portray you as a bad borrower. The negative remarks that have the most impact on your score include:

• Accounts in collections or written off as “uncollectible”
• Bankruptcy, foreclosures, and repossessions 
• Late payments or delinquency
• Multiple hard inquiries

Note which bureau’s report includes the error or derogatory remark so you can handle each with the respective institution. 

Dispute Errors in Your Credit Report 

This is a vital step in the cleanup process. It requires disputing the errors you find by filing a claim with the concerned bureau over the phone, via mail, or online. Every bureau is expected to investigate the dispute within 30 days and then notify you of the results within five business days. 

If you’re required to provide additional information during the investigation, the resolution can take up to 15 more days. Under federal law, the credit bureau and the company that provided the information are responsible for correcting the error.

Settle Pending Debts 

If you have outstanding debts, especially on a credit card, work toward paying them off. This is important because the amount of debt you owe compared to your credit limit, also known as your credit utilization ratio, significantly affects your credit score.

A few ways to settle credit card debt include redeeming cash back rewards you’ve earned on your credit card or consolidating your debt with a personal loan. Personal loans don’t factor into utilization and can help pay off large debt and lower your credit utilization ratio.

Use a Credit Repair Service

A credit repair service may be able to assist in cleaning up your credit, but it usually comes at a high cost. 

Many of their services and processes, including cleaning up errors and discrepancies, are activities you can do for free by yourself. However, these services charge unnecessary fees to do it on your behalf. In some states, such as Georgia, repair services are even considered illegal.

Many credit repair services have also been found to be fraudulent, so ensure you find a reliable one from the right source. If you need assistance finding one, consult your state’s Attorney General office, the U.S. Department of Justice, or the nearest consumer protection office.

How To File a Dispute With a Bureau or Lender

Filing a dispute with your lender or creditor is simple. Contact the business using the company’s contact details, which should be on your monthly billing statement. It’s part of the lender’s responsibility to correct errors on your report, just as it is the bureau’s.

Filing a dispute with a credit bureau takes a few more steps because each bureau has its own separate dispute process. You must contact each one directly to submit a dispute. 

Filing a Dispute With a Bureau via Mail, by Phone, or Online

A popular method of correcting credit errors is to file a dispute via mail. Write a letter detailing the inaccuracies in your report or mail a dispute form to the relevant bureaus, along with documents that can back up your claim. 

You can also submit an online dispute form or call the bureaus to follow up with the dispute. The table below provides the contact information for each bureau, depending on your preferred dispute method:

How To Dispute Negative Remarks Due to Identity Theft

If you think you’ve fallen victim to identity fraud, immediately file a dispute with the Federal Trade Commission (FTC) via the official IdentityTheft.gov website or call 1-877-438-4338. File a police report as well, detailing the incident, along with any proof you have. 

Contact the credit bureaus to dispute any information or activity on your report that doesn’t belong to you. Ask them to place a freeze and fraud alert on your account, then contact your credit issuer to close any compromised account to prevent greater damage to your score.

Improving Your Credit After Cleaning Your Report 

After cleaning your report, you must be extra careful not to trigger any actions that cause more harm to your credit score. Follow these tips to improve your score safely:

• Avoid closing a credit line that’s late on payments—Closing a credit line that’s behind on payments can lower your credit score because it will increase your credit utilization. You’ll have less available credit and be flagged as a high-risk borrower. Try to keep your utilization rate below 30% to maintain or quickly boost your score 
• Don’t file for bankruptcy—A bankruptcy can seriously damage your score, reducing it by up to 200 points. It can also negatively impact your ability to get loan approvals for years until your score goes back up. Only file for bankruptcy as a last option
• Use a credit building solution—A trusted credit building solution like CreditStrong helps you build credit fast with its various account types. Unlike credit repair services, it offers a safer way to improve your credit score. You can use its revolving line of credit with a savings account to quickly lower your utilization and gain up to a 62-point score increase

CreditStrong—Your Reliable Credit Building Partner

CreditStrong is a credible FDIC-insured platform by Austin Capital Bank that helps you build credit from scratch or past damage. It works directly with Equifax, Experian, and TransUnion, promptly reporting your on-time payments to ensure total transparency. 

To build your credit, CreditStrong offers you two options:

1. A secured consumer installment loan
2. A revolving line of credit

Combine any of these options with a savings account, and you’ll be able to build your credit score and grow your savings alongside it. The platform allows you to check your FICO Score for free every month to track your progress.

CreditStrong Accounts & How They Work

There are three key CreditStrong accounts—Instal, Revolv, and MAGNUM. Here’s how they work:

Regardless of the account you choose, your payment history is the largest factor determining how well your score will increase. If you maintain consistent on-time payments and avoid missing a payment, your score will go up.

Steps for Opening a CreditStrong Account

Opening a CreditStrong account is simple. You can activate one even with a low credit score without triggering a hard inquiry when you apply, so applying for a CreditStrong account will not hurt your credit. 

To open your account, take the following steps:

1. Get started here
2. Choose from the three products based on your credit goal:
   • MAGNUM—Starting at $30 a month
   • Revolv—$99 a year
   • Instal—Starting at $28 a month
3. Submit an online application via the provided form
4. Track your progress, savings, and payments in your dashboard

The post How To Clean Up Your Credit Score—5 Straightforward Steps appeared first on Credit Strong.

When you’ve applied for a loan or credit card and gotten denied, you’re given reasons for the denial that are sometimes confusing to understand. And finding derogatory marks on your credit report can feel like a gut punch, especially if you weren’t aware of any issues.

While too few accounts paid as agreed might mean that you’re behind on payments with multiple creditors, it has a more innocent meaning too. Read more to find out how this credit application response might not be as bad as you think it is. 

What Does “Too Few Accounts Currently Paid As Agreed” Mean?

Having too few accounts currently paid as agreed could mean one of two things. Either you’ve fallen behind on payments with multiple creditors or your credit file is just too new. Both of these scenarios will prevent you from getting the credit accounts you want. Let’s go over each one. 

There are a number of reasons why people fall behind on payments. The loss of a job or even health problems that led to financial hardship. No matter the cause, credit bureaus, and lenders see this as a red flag because delinquency and public records are major factors of bad credit.

From their perspective, this means you likely won’t make future payments if they approved you. Catching up on payments might feel like you’re scaling Mt. Everest, but it doesn’t mean bad credit forever. We’ll go over ways you can improve your credit report shortly.

The other reason behind “too few accounts currently paid as agreed” is that your credit history is too new. It’s also known as a thin credit file. You may have made your first few payments on a loan or credit card on-time, but you might still get this reason when applying for new credit. 

It means that you don’t have enough credit lines for lenders and credit bureaus to determine what type of borrower you are yet.

So while you haven’t made any mistakes, you’ll have to prove that you’re a responsible borrower with a few more accounts on your credit report.

How Do I Fix “Too Few Accounts Currently Paid As Agreed?”

Fixing this response comes with a few different steps. It will likely be a bit more difficult if you’ve fallen behind on payments because you’ll have to bring any past due accounts current before moving into the next steps. 

Once you’re back on track, you can move forward with improving your credit. For borrowers with limited credit history, it will be easier to solve this problem. To nail down the reason behind the derogatory mark, be sure to check your credit report first to confirm the issue.

Make Timely Payments

Making timely payments on all of your accounts is credit 101. Whether that consists of putting your bills on automatic payment, setting reminders on each due date, or budgeting enough money to ensure that each bill is paid. You have to make it happen. 

Your payment history is a track record of how well you’ve managed multiple payment obligations. It’s also a large chunk of how your credit score is calculated. It’s 35% of FICO credit scoring models to be exact. 

Open New Accounts

Once you’ve started cleaning up your payment history, you can begin opening new accounts. You might be wondering how you’ll open new accounts if you’re still climbing your way out of bad credit, but there are still options available to you.

Secured credit cards typically accept borrowers with bad credit. You’ll simply need to put up a security deposit, which then becomes your new credit limit. 

To avoid finance charges, pay it off as you make purchases. Be sure to keep making timely payments on any new accounts you open. 

Improve Your Credit Mix

Credit mix makes up 10% of your overall credit score. It might not seem like a big deal to have different types of accounts on your credit report, but it actually shows creditors that you’re capable of managing multiple forms of credit responsibly. 

If you only have one revolving account on your credit report, a lender likely won’t take the chance of approving you for an installment loan because you don’t have experience with it. To fix it, you’ll need to prove yourself by adding an installment loan to your credit mix. 

Keep Your Old Accounts Open

Paying off a credit card or other revolving account debt is a big accomplishment. So it’s no wonder why you might think to close the account after you’ve paid it off. However, this can actually have a negative impact on your credit score. 

Closing established accounts means the available credit is no longer open to you. This drives your credit utilization rate up. Plus, the years you’ve kept your account open are no longer part of your account age. For the best path to good credit, keep older bank revolving accounts open.

Reduce Credit Utilization

One of the best ways to improve your credit score is to pay down debt to reduce your credit utilization ratio. You can do this by paying extra towards revolving debts instead of just making the minimum payment. This helps you accomplish three goals:

1. Pay down revolving debt faster
2. Increase your amount of available credit
3. Bring your credit utilization below 10%

By aiming to reduce your credit utilization, you’ll be on your way to a good credit score. You should aim to bring your utilization rate below 10% for the best results.

Things That Impact Your Credit Score

Your FICO credit score is impacted by five factors that are all used in the calculation of your score: 

• Payment History: 35%
• Credit Utilization: 30%
• Age of Accounts: 15%
• Credit Mix: 10%
• New Credit Applications: 10%

Ideally, you want to have everything on your credit report listed as paid as agreed. Meaning you haven’t missed any payments and are currently in good standing with your creditors. Having one late payment of more than 30 days can hit your FICO score hard. 

Late payments that are 120 days to 180 days past due are considered to be in default and result in a public record or collections account on your credit report which is much harder to bounce back from since it causes major damage. 

Your credit score is also impacted by how many open accounts you have as well as the age of those accounts. Both of these factors contribute to a substantial credit file. 

How To Improve Your Credit Score

Improving your credit score is a journey that could change your life. With hard work and patience, you could go from missed payments to getting approved for the best credit cards, auto loans, and mortgages. 

To help you on your journey to building credit, use Credit Strong’s credit builder loan. Affordable credit builder loans allow you to build credit and save money at the same time. 

Just choose the plan that works best for your budget. As you make monthly payments, Credit Strong reports your payment history to all three credit bureaus to help you build good credit. It helps you by:

• Improving your credit mix
• Increasing the number of accounts in your credit report
• Populating your credit report with positive payment history

To get started building credit with Credit Strong, you don’t even have to risk a hard pull on your credit. The application process is easy and fast. Plus most customers raise their score by 70 points within a year of on-time payments. 

In terms of credit score statistics, that could take you from having fair credit to good credit. Choose your affordable monthly plan today and build up to 120 months of credit history! 

FAQs

What Are Accounts Paid as Agreed?

Accounts paid as agreed means that you’ve met the payment obligations for the credit accounts you’ve held over the life of your credit history. This looks like on-time payments of the minimum amount owed on revolving accounts and full payments for installment accounts.

Does Your Credit Score Go up Every Time You Make a Payment?

Your credit score doesn’t go up every time you make a payment, but it does go up when you hit certain payment benchmarks–such as 100% on-time payments for six months, eighteen months, one year, or two years.

How Does “Too Few Accounts Paid as Agreed” Affect My Credit Score?

Having a derogatory mark like “too few accounts paid as agreed” will negatively affect your credit score. It basically tells the credit bureaus and potential lenders that you’re not able to make your payments on time or potentially at all. 

The post Too Few Accounts Currently Paid As Agreed: What It Is & How to Fix It appeared first on Credit Strong.

Building credit is an important part of your financial life. Your credit score determines the loans and credit cards you can qualify for and the interest rates of the loans you can get.

You can build credit by making monthly payments toward your loans, so many people wonder whether paying their other bills can improve their credit score.

What Bills Help Build Credit?

In general, lenders will report your payment activity to the credit bureaus. Non-lenders who provide services and send you monthly bills are not obligated to report your payments to the credit bureaus. If you’re paying for a service like internet or a cell phone, those bills typically don’t get reported to the credit bureaus.

In short, if you’ve borrowed money and are getting a bill to pay it back, those payments will go on your credit score and help you build credit. 

Your payment history is the number one factor that influences your credit score. Timely payments boost your score, while late and missed payments hurt it. 

Other important factors for boosting your credit score include making sure you have a low credit utilization rate and don’t open too many new credit accounts in a short period of time.

Credit bureaus only put the information that they receive from lenders and financial-related legal actions on your credit report. They don’t go out and search for other bills you pay, such as utility bills. They are reliant on receiving information from the parties you’re paying.

That’s one reason that it’s possible to have different credit scores with each of the credit bureaus. If one of your accounts is reported to one credit bureau but not another, your score with each bureau will be different.

Ultimately, that means while loan bills can help you increase your credit, other types of bills generally won’t appear on your credit report and won’t build your FICO score no matter how diligent you are about paying them.

One caveat is that while many companies bill you for services, many won’t report your good actions to the credit bureaus, but missing payments on these services can ultimately damage your credit score. 

If those accounts wind up in collections, it can cause your score to drop by a significant amount.

This makes the situation even worse because paying your phone bill and utility bills is important to avoid damaging your credit but doesn’t help build your credit score at all. 

That makes it all the more important to pay all of your bills on time and to make sure you get a credit card or other type of loan so you can start building a good credit history.

Bills That Are Usually Reported

A good rule of thumb to use when trying to figure out whether a bill is reported to the credit bureaus is whether the bill is coming to your mailbox because you’ve borrowed money.

In general, if you’re borrowing money from a lender, the bills you receive from that lender do get reported to the credit bureaus: Experian, Equifax, and Transunion. 

That means things like car payments, credit card payments, student loan payments, and mortgage payments will all show up on your credit report.

Other information about these bills, such as your credit limit or the original loan amount, as well as the current balance, also appear on your credit report. These are used for calculating the age of your credit accounts and your credit utilization ratio.

Lenders who run a credit check to decide whether you have good credit and are eligible for a loan will tend to report or may even be obligated to report your bills.

Bills That Are Usually Not Reported

Not all bills get reported to the credit bureaus and show up on your credit report.

In general, if you’re paying for a service, but haven’t borrowed money, that bill won’t show up on your credit report and won’t help you build credit. This can include bills such as:

• Rent
• Utilities
• Cable and internet
• Cell phones
• Insurance
• Medical bills

When you pay these bills, the billing company might wind up reporting your payments to a credit reporting agency like Experian, but they are under no obligation to do so. 

Paying these bills in a timely manner is still important. Your payments will prevent the service provider from shutting off your access and help you avoid late fees. 

Consistent nonpayment may get your account sent to collections. However, your payments on these types of bills generally won’t help you build credit.

How Do Utility and Phone Bill Payments Appear on My Credit Reports?

While most service providers like utility companies and cell phone companies won’t report your payments to credit bureaus, there are some that offer this service. This gives you the opportunity to build credit by paying bills that aren’t from an installment loan.

Some companies, like Experian, let customers sign up to get their non-loan bills included on their credit reports. 

The companies offering this service claim that the average user can improve their scores by more than 10 points just by adding their utility and other bills to their credit reports.

These accounts show up on your Experian credit report as monthly bills that help you improve your payment history. Payment history is the number one factor that lenders look at when examining your credit history. 

This service won’t impact other things like your available credit, which means your Experian credit rating won’t improve due to a lower credit utilization ratio.

Can Late Bill Payments Affect My Credit Score?

Although paying things like utility bills and rent generally won’t improve your credit score, missing payments on your bills can cause your score to drop.

If you consistently miss your rent payment or other bills, those accounts could eventually wind up in collections.

When you miss bill payments, you wind up in debt to the company providing the service. When the biller sends your account to collections, that means it has sold your debt to a debt collection company that will then come after you for payment.

When you have an account in collections, whether it’s from a loan or a service that doesn’t typically report to the credit bureaus, it can show up on your credit score. Having accounts in collections usually leads to having a bad credit score and a struggle to qualify for new loans.

If you try to get a card from a new credit card company, that lender might see your accounts in collections and choose not to offer a loan.

Other Ways to Build Credit

Though your everyday bills like rent and utilities won’t help you build credit, there are plenty of other ways that you can build credit.

Your credit score relies on five factors. According to Experian, those factors, in order from most important to least important, are:

• Payment history
• Amounts owed
• Length of credit history
• Credit mix
• New credit

With some careful consideration, you can take steps to improve each of these aspects of your credit history with Experian and each of the other credit bureaus.

Use CreditStrong

One great service that borrowers can use to boost their credit is Credit Strong.

CreditStrong offers a special type of personal loan called a credit builder loan. When you apply for the loan, CreditStrong will set aside a sum of cash on your behalf. 

Each month, CreditStrong will send you a bill. With each monthly payment you make, you’ll build your credit history and start building a good credit score. CreditStrong reports to all three credit bureaus: Experian, Transunion, and Equifax.

When you complete your payment plan, CreditStrong will release the money that is set aside for you. You’ll pay in a bit more than you get out of the account due to interest and fees, but you’ll wind up with some savings and a better credit score.

Apply for a Secured Credit Card

A secured credit card is another great tool for people who want to build their credit. They’re a viable option for both people with poor credit and people with no credit.

When you apply for a secured credit card account, you have to provide a security deposit. Typically, the credit limit you receive from the card issuer will be equal to the security deposit you provided.

Once you get the card, you can use it like any other credit account. You can use it to pay for things in stores and get a bill at the end of the month. So long as you make your payments on time, you can build your credit.

Keep in mind that secured credit cards charge a high interest rate if you carry a balance. Only use the card to pay for things you can afford so you can avoid expensive credit card debt.

Secured credit cards are a good way to add revolving credit to your credit profile. A good place to look for them is at a credit union or from any bank where you have an open bank account.

Pay Off Any Existing Debt

The amount you owe and your credit utilization ratios play a big role in determining your credit score. Paying down your existing debt can help reduce both of these factors, which will give your score a boost with all three credit bureaus: Experian, Equifax, and Transunion.

Another thing you can try is asking your lenders for a credit limit increase. The higher your overall credit limits, the lower your credit utilization ratio will be. That means you can have a higher balance without it having a major impact on your credit score.

Make On-Time Payments Each Month

The number one thing you can do to build credit is make your monthly payments on time. A single late or missed payment can have a massive effect on your score and can take months or more to come back from.

Conclusion

The three major credit bureaus rely on the information they receive from credit card issuers and other lenders to build your credit profile. 

That means loan payments will typically help you build credit but other types of bills, like rent and utilities, will not.

The post What Bills Help Build Credit? appeared first on Credit Strong.

Most utility payments will not appear on your credit report and will not affect your credit. Some services are available that will report utility bill payments, but some only report to one credit agency, and others charge a fee.

Does Paying Utilities Build Credit?

Paying utilities will only build credit if the payments are reported to the three major credit reporting bureaus: Experian, Equifax, and TransUnion. Most utility companies do not report payments.

Everything in your credit report is reported by your creditors. Creditors pay to report records, and if they report they are subject to regulation under the Fair Credit Reporting Act (FCRA).

Most utility companies don’t want the cost or the regulations that go with reporting. As a result, they don’t report your payments, so those payments will not build good credit.

Missing utility payments can hurt your credit. Your utility provider won’t report missed payments, but they may sell your account to a debt collector. The collector will report a collection account, which can then do serious damage to your credit.

What Bills Affect My Credit Score?

Only payments that are reported to the three major credit bureaus will affect your credit. These bills usually involve loans, like a student loan, personal loan, car loan, or revolving credit accounts, such as a credit card.

Bills that are not reported to a credit reporting agency, like rent and utility payments, will not affect your credit score unless your account is delinquent and gets sent to collections. 

There are ways to place some payments on your credit report. Some lenders also consider data other than your credit score in lending decisions, and this may include rent or utility payments.

How Do Utility Bill Payments Affect My Credit Scores?

If you simply make your utility payments on time, they will not affect your credit score. If you miss payments, your FICO score could be harmed.

There are several ways to place utility payments on your credit report:

• Sign up for Experian Boost. This free service will place your utility payments on your Experian credit report.
• Sign up for eCredable Lift. This is another free service that will place your utility payments on your TransUnion credit report.
• Use a private reporting service. Services like ExtraCredit and LevelCredit will report utility and rent payments to the major credit bureaus. You will have to pay for this service. You may have to make automatic bill payments from your bank account.
• Use a credit card. Paying your utility bills with a credit card will place them on your credit record, though it won’t be a separate tradeline. Some utilities may not accept a credit card payment or may charge a convenience fee.

Any of these methods will place your utility payments on your credit record. If your credit record is thin or if you have no score yet, you may see a significant boost. If you have an extensive record, the difference may not be noticeable.

How Do Utility and Phone Bills Appear On My Credit Reports?

If you use a reporting service to place utility or phone payments on your credit report the entries will appear in the “accounts or “tradelines” section of your credit report. Each credit bureau formats its report in its own way, so you’ll need to check your credit reports to confirm the way the account is presented.

Your account may not appear on all three credit reports. This will depend on the reporting service you use. Experian Boost will only appear on your Experian credit report and eCredable Lift will only appear on your TransUnion credit report.

Other Ways to Build Credit

If you’re looking for ways to build credit, look beyond utility bills. Reporting utility payments may help, but you may also be able to find more effective ways to improve your credit score.

Start by checking your credit reports. Errors or identity theft could drag your score down.

Use Credit Strong

A credit builder loan from CreditStrong is an accessible and effective way of building credit. The money you borrow goes into a locked account. You then make small monthly payments, and when the sum is paid off, it’s released to you, minus the interest.

Because these loans involve very little risk to the lender, they are available to people with bad credit or no credit. The low payments make it easy to keep on schedule and build a good payment history. That combination makes Credit Strong a great first step to building credit.

Credit Strong places an installment loan on your credit file, so it’s a great complement to a secured credit card or other revolving credit accounts. If you’re looking for credit-building options, check out CreditStrong today!

Apply For a Secured Credit Card

A secured credit card is a top choice for anyone looking for ways to build credit. You’ll put down a security deposit, and that deposit will become your credit limit. 

After that, the card works just like any other credit card. You can make purchases and even get cash advances up to your credit limit. The credit card company reports your payments.

Your deposit removes much of the card issuer’s risk, so it’s usually easy to get approved. Many banks and credit unions offer secured credit cards.

Some secured cards are available with poor credit and some have no credit check. The easiest cards to get often have an annual fee, which you’ll want to avoid if possible.

A secured credit card places a revolving credit account on your record. If you make your payments on time, you’ll build a good credit score. If you miss payments, you will hurt your credit rating. If you carry a balance from month to month, you will incur significant interest expenses.

Unless you make a large deposit, you will have a low credit limit. You’ll have to watch your credit utilization – the percentage of your available credit limit that you use – carefully. Try to keep your balance below 30% of your limit.

A student credit card or store credit card can also help you build credit.

Pay Off Existing Debt

If you’re carrying credit card debt, paying it off can boost your credit and save you a substantial amount of money on interest payments.

Credit utilization is an important factor in calculating your credit score. High credit card balances usually mean high credit utilization. They also increase your debt-to-income ratio, which is not part of your credit score but is an important factor in qualifying for many loans.

If you’re paying off installment loans, your best bet will usually be to keep paying the loan on schedule. 

Make On-Time Payments Each Month

Payment history is the single most important factor in computing your credit score. Every time you make an on-time payment, you build a good payment history. Every time you make a late payment, you hurt your credit history.

If you have to make a late payment on a monthly bill, call your creditor and explain why. Many creditors will refrain from reporting a late payment if you touch base with them and ask them not to report, especially if you have established a good payment history to that point.

Conclusion

Utility payments that are on time will not normally appear on your credit report or help you build good credit. Late payments can hurt your credit if the utility provider sends your account to collections. 

There are ways to place utility payments on your credit reports. Some are free but only report to one credit reporting company. For example, Experian Boost will only place payments on your Experian credit report. 

If you want payments reported to all three credit bureaus, you will have to pay for it. 

There are other ways to build credit, and you’ll have to decide whether the cost of reporting utility payments is worth the gain. You may be better off with a different credit-building method.

The post Does Paying Utilities Build Credit? appeared first on Credit Strong.

Most negative credit report entries, such as late payments, that appear on your credit history with the major credit bureaus remain there for seven years. If you want to know how to rebuild credit, you can start by making timely payments on all available credit accounts and using other strategies explored in this article.

7 Strategies To Rebuild Credit

The first step to rebuilding credit involves obtaining a recent copy of your credit report. Each credit reporting agency will provide you with a free copy annually and offer easy ways of disputing any errors that are contributing to your low credit score.

When checking your report, ensure the information on it is accurate. Search for amounts, accounts, and addresses you don’t recognize, so you can dispute an error if you find it.

Once you’re done inspecting your credit report, you should consider the following strategies for rebuilding credit:

1. Paying bills on time
2. Maintaining a good credit utilization ratio
3. Getting a credit builder loan
4. Obtaining a secured credit card
5. Getting a mix of credit accounts
6. Becoming a credit card authorized user
7. Avoiding applying for too much credit in a short time

Pay Your Bills on Time

According to FICO^®, the leading organization that develops models for calculating credit scores, your payment history is the largest single factor that influences whether you have a negative or positive credit history—making up roughly 35% of your credit score. 

Consumers actively rebuilding credit must pay all current credit accounts on time. Accounts that influence your credit history include revolving credit accounts like credit cards, installment loans, such as car loans and most personal loans, and others.

Documenting all due dates or establishing reminders will help avoid late payments. Credit card issuers and others offer automatic electronic payment options that ensure at least the minimum payment amount is paid directly from your checking account.

Maintain a Good Credit Utilization Ratio

One factor that lenders review for assessing risk is a borrower’s credit utilization ratio (or rate). Expressed as a percentage, the utilization rate is calculated with a simple formula that pertains exclusively to revolving accounts such as credit cards as follows:

Current total credit card balances / Total available credit card limit (maximum) *100 = %

For example, if your credit limit is $1,000 and you currently have $500 in debt, then the utilization rate is 50%.

Credit Karma explains that most experts recommend keeping your credit utilization ratio below 30%. When a borrower is approaching their maximum credit limit, lenders may perceive that the individual is experiencing financial problems.

Get a Credit Builder Loan

Credit builder loans are installment loan accounts that build credit, such as those offered by CreditStrong. As a division of the Texas-based Austin Capital Bank, CreditStrong offers these loan options, which can effectively build a borrower’s payment history.

Rather than receiving the loan funds directly, CreditStrong deposits the entire loan amount into a savings account where they remain throughout the loan term. During the term, the borrower makes affordable, fixed, monthly payments toward the loan.

In the meanwhile, CreditStrong regularly reports loan activity to the three major credit bureaus. After making all the loan payments, the borrower now may access the original loan funds from the savings account.

Build your credit the easy way—sign up for CreditStrong.

Get a Secured Credit Card

Another credit repair or improvement option involves establishing a secured credit card. Unlike a traditional unsecured credit card, secured credit cards require that an applicant make an initial security deposit, which equals the secured card’s credit limit.

After obtaining the new credit card, cardholders should use the card regularly for purchases as they would with any credit card and make timely repayments of the debt. After demonstrating a responsible pattern of credit use, cardholders often qualify for an unsecured card.

Remember to avoid having any late payments, as this could worsen your credit history instead of working toward building good credit.

Get a Mix of Credit Accounts

Consumers with very good credit scores usually demonstrate responsible debt management practices using two or more categories or types of debt—commonly referred to as a “credit mix.”

According to Experian, your credit mix may influence credit scores by up to 10%, and they recommend simply establishing both a revolving and installment credit account.

Become a Credit Card Authorized User

One alternative to establishing new credit accounts involves asking a friend or relative to add you as an authorized user on their credit card account, which makes you eligible for purchasing goods or services with the card.

Before relying on this strategy, ensure that the credit card issuer reports authorized users to the major credit bureaus. You should also keep in mind that if the primary cardholder has bad credit practices, this strategy could backfire and actually worsen your credit score.

Don’t Apply for Too Much Credit in a Short Time

In most cases, each time a consumer applies for a new credit account the potential lender will check the applicant’s credit report. This process generates a hard credit inquiry or hard credit “pull” that remains visible for up to two years.

Lenders may interpret that a consumer with multiple recent hard inquiries has abruptly encountered some financial problems. Don’t confuse hard inquiries with soft inquiries, which result only from creditors seeking information for marketing purposes such as pre-approved offers.

Soft inquiries remain invisible on credit reports except when consumers access their personal credit reports.

Factors That Affect Credit History

The FICO scoring model uses the following factors:

• Payment History (35%)—The largest single factor is a consumer’s history or track record of past credit use. Lenders recognize that past behavior often represents a strong indicator of future outcomes.
• Amount Owed/Credit Utilization (30%)—This second most important factor looks at your overall amount of debt and your credit utilization rate or ratio. The utilization rate is the percentage of current revolving debt being used relative to the overall amount (maximum) available credit limits.
• Length of Credit History (15%)—Lenders prefer consumers who have an established, multi-year history of responsibly managing credit accounts.
• Credit Mix (10%)—Consumers should strive to prove their creditworthiness across two or more types of credit accounts. For example, installment loans, such as auto loans or student loans, and revolving accounts such as credit cards.
• New Credit (10%)—Having multiple recent “hard credit inquiries” may suggest that some unexpected financial problems have occurred; therefore, avoid applying for many new credit accounts in short periods. 

How Long Will It Take To Rebuild My Credit?

If you make smart moves after tanking your credit, you can rebuild your credit score in as fast as two years. Unfortunately, your credit report may take longer to clean up.

The amount of time needed to rebuild a bad credit history varies based on the circumstances. One critical variable involves the severity of the damage, as someone with multiple collection accounts and bankruptcy will need more time than someone with a single late payment.

Based on the severity of the damage, consumers might make significant improvements in only a few months, while others will require a couple of years. Keep in mind that the majority of adverse credit report entries remain on credit reports for seven years.

Highly motivated consumers should create a written plan that encompasses multiple best practices for faster results. This multi-pronged approach should involve correcting any credit report errors, maintaining existing accounts, and pursuing new credit-building opportunities.

First, obtain copies of your credit reports from the credit bureaus and carefully review them for any errors. If errors exist, filing a dispute and having these corrected may help quickly boost your credit.

Next, ensure that all existing credit accounts remain current and in good standing. Pay down current balances and implement tools such as automatic electronic options that will prevent any late payments.

Lastly, establish at least one new account specifically for “building” your credit such as a credit builder loan or a secured credit card account.

Rebuilding Credit FAQs

If you want to know more about rebuilding your credit, fret not—you can find answers to some of the most commonly asked questions below.

What Is the Fastest Way To Rebuild Your Credit?

The quickest way of rebuilding your credit involves creating a comprehensive plan where you simultaneously strive to improve your existing credit history, maintain your existing credit accounts, and establish new credit accounts specifically for boosting your credit.

Review your current credit report to identify any errors and promptly file a dispute with the appropriate credit bureau(s) or creditor(s). In many cases, this process might yield results that boost your credit score in only a few weeks.

At the same time, you should remain current on any existing credit accounts by making timely payments and reducing balances on credit cards. Further, establish at least one new “credit-building” account such as by obtaining a credit builder loan or secured credit card account.

How Do I Wipe My Credit Clean?

Quickly removing all the reported entries on your credit report is generally not feasible. Keep in mind that most negative credit report entries are automatically removed after seven years, except for a Chapter 7 bankruptcy that will remain for ten years.

A more realistic goal involves taking steps toward improving your existing credit history, maintaining all current credit accounts, and pursuing new opportunities for establishing credit accounts with a commitment to handling them responsibly.

How Can I Raise My Credit Score By 100 Points in 30 Days?

Improving your credit score by 100 points in only 30 days is a “lofty” goal, but it may prove feasible. The largest single factor that influences your credit is your payment history, which is a process that evolves over several months (if not years).

Three of the actions that may produce results in a short time include:

1. Correcting any existing errors on your credit report
2. Substantially improving your credit utilization rate
3. Having other monthly expenses, such as rent or utility payments, reported to the credit bureaus

First, request your free annual credit report and identify any errors. The major credit bureaus now have very quick and easy ways for consumers to file a dispute and have errors corrected.

You may boost your credit utilization rate quickly in a couple of ways. First, pay down any existing credit card balances to reduce your current amount of debt. Second, ask your existing credit card account issuers for increases in your available credit limits.

Lastly, check with your landlord, utility providers, or other companies that you have an existing relationship with about reporting your account activity to the major credit bureaus. 

The post How To Rebuild Credit—Strategies Worth Exploring appeared first on Credit Strong.

Your credit impacts your life in more ways than you might think. Not only can a bad score limit your access to affordable financing, but it can also be a red flag to prospective employers, landlords, and even romantic partners¹.

Fortunately, no credit score is so low that you can’t fix it. If yours isn’t quite where you want it to be, here’s everything you need to know about how to build credit.

Check Your Credit Report and Dispute Any Errors

If you already have an established credit history, check your credit report before applying for any additional accounts. You can get a free copy from each major credit bureau once every 12 months through AnnualCreditReport.com.

These reports contain all the information lenders use to calculate your credit score, including your current and historical credit usage. As a result, they provide valuable insight to refine your credit-building strategy.

In addition to using your credit report for planning purposes, double-check that all the details are accurate. One of the more disappointing credit score statistics is that roughly 34% of consumers have at least one error in their credit report.

If you have an error that has to do with your credit accounts, it could materially impact your credit score. For example, you might find that the balance on an old credit card you paid off still shows up, artificially inflating your outstanding debts and credit utilization.

If you find errors like these, you can dispute them with the credit bureau responsible for the report. Fortunately, Experian, Equifax, and TransUnion all make it relatively easy to do so online.

Get a Secured Credit Card

Secured credit cards are one of the best tools for building credit, whether you’re starting from scratch or recovering from past mistakes. If you don’t have any revolving credit yet, they should probably be the first account type you consider.

In most ways, secured cards function identically to traditional credit cards. You can use them to complete your daily transactions, and they often provide modest cash back rewards.

However, you must provide the credit card issuer with a refundable cash deposit to qualify. Typically, the amount is equal to your eventual credit limit. That way, the credit card company can use the funds as collateral and cover their losses if you ever default.

As a result, a secured card should be accessible to you, regardless of your credit history. Saving up a lump sum for the deposit can be challenging for some, but you can find accounts that require as little as $200.

If you can’t afford to save that much right now, it’s probably best to avoid taking on new debt until your finances are more secure. Otherwise, you risk missing payments and damaging your score.

In addition to being accessible to people with bad credit, some secured credit cards entail no annual or other fees.

Get a Credit Builder Loan

The diversity of your credit mix is worth 10% of your FICO Score 8, the most popular score among lenders. In other words, you must have revolving and installment debt accounts to maximize your creditworthiness.

Revolving debts provide reusable credit lines, while installment debts provide a single lump sum upfront. For example, student credit cards and home equity lines of credit are revolving, while a student loan, personal loan, and car loan are all installment credit.

Typically, it’s unwise to take out installment debt to build credit since they’re expensive and hard to qualify for without an excellent credit score. Fortunately, credit builder loans help you get around those issues.

Like secured credit cards, credit builder loans use collateral to give the provider greater security. However, they use the loan proceeds instead of a cash deposit from the borrower.

As a result, you don’t have to bring any cash to the table, but you can’t use the secured loan to finance a purchase or a debt consolidation.

Fortunately, credit builder loans usually don’t require that you undergo a credit check, so you can qualify for one with a poor credit score or limited credit history. Here’s what happens next:

1. After you open your credit builder loan, you make the usual monthly principal and interest payments, which the provider reports to the credit bureaus
2. Once you’ve paid off the balance, the provider returns your principal payments, and you’ll finish the process with additional payment history and extra cash savings

CreditStrong offers customizable credit builder loans that you can cancel at any time without penalty. Take a look at our account options and give one a try today!

Pay Your Bills on Time

Building credit requires using a diverse mix of credit accounts responsibly, which primarily means making your monthly payments on time. Your payment history is worth 35% of your FICO Score 8, making it more impactful than any other scoring factor.

As a result, you must do everything you can to make each monthly payment on time and in full. Even one missed payment can damage your score significantly and stays on your credit report for seven years.

Fortunately, while each lender has a unique policy for penalizing a late payment, they generally won’t report you to the credit bureaus until you’ve been delinquent for 30 days.

You only have to make the minimum monthly payment to appease them, but it’s usually a bad idea for revolving credit accounts since you’ll incur significant interest charges.

Not only will that increase your financial burden and make it more likely that you’ll miss future payments, but it’ll increase your outstanding debt balance, which can also damage your score.

Pay Off Debt

Your credit utilization ratio is the second most significant factor impacting your credit score. It’s worth 30% of your FICO Score 8, making it only slightly less important than your payment history.

Generally, this scoring factor accounts for the fact that you can only take on so much debt before you’re unable to afford further credit. As a result, paying down your outstanding balances increases your score.

If you already have a significant amount of debt, consider reducing it before you try to get more credit. You’ll save the most money and get out of debt fastest by prioritizing the account with the highest interest rate.

Paying off debt reduces your credit utilization ratio, which lenders use to get context for your outstanding balances. It equals the amount you owe divided by your available credit limit.

For example, a credit card account with a $1,500 balance and $3,000 credit limit has a 50% credit utilization ratio. Conventional wisdom states your score should be fine if your ratio is below 30%. However, it should be between 1% and 10% for optimal results.

Become an Authorized User

Becoming an authorized user is one of the quickest and easiest ways to build credit. It involves having someone add you to their credit card line, adding its history to your credit report, and giving you the ability to borrow against it.

However, authorized users aren’t responsible for paying the card’s balances. As a result, there’s some risk involved for the primary cardholder, and you can typically only become an authorized user on a card of someone who trusts you, such as an immediate a close friend or a family member.

Parents often add their children as authorized users in young adulthood to help them build an initial credit foundation. The process is easy to complete online, and there’s generally no credit check involved. If you’d like to build the credit of your children ages 14-25 while protecting up to 2 parents and 6 children from identity fraud, check out FreeKick from the Credit Strong family.

Request a Credit Limit Increase

Paying off your outstanding debts lowers your utilization ratio and improves your credit score. However, you can only pay off debt so quickly, and not everyone has enough cash flow to pay more than the minimum amount due.

Fortunately, you can also improve your credit utilization ratio from the opposite end. Instead of reducing your debt balance, you can increase your credit limit.

For example, say you have $2,500 of credit card debt on an account with a $5,000 credit limit. Your credit utilization ratio is 50%, but you request a limit increase from your credit union. Your borrowing power goes up to $7,500, reducing your utilization to 33%.

While this isn’t a tactic you can use very often, it’s worth considering if you’ve kept a credit card in good standing for a year or two. The best way to request the increase is to call your card issuer directly.

Keep Credit Cards Open

The length of your credit history is the third most impactful credit scoring factor, worth 15% of your FICO score. It probably won’t make or break your creditworthiness, but it’s still significant.

Generally, this factor accounts for the fact that a lengthier credit history means you have more experience managing debt. As a result, the longer your credit history and the older your credit accounts, the better your score.

FICO incorporates all of the following into your creditworthiness:

• Age of each credit account, especially your oldest and newest
• Average age of all your credit accounts
• Length of time since you’ve used each credit account

As a result, it’s best to keep your credit cards open indefinitely and use them intermittently, even if it’s for a small transaction.

Be Careful With Credit Applications

The fifth credit scoring factor is worth 10% of your FICO score. It incorporates any recent hard credit inquiries into your score, which you incur each time you try to qualify for a new credit account.

Generally, this factor’s purpose is to account for the fact that applying for too much debt at once is a red flag to lenders. It indicates that you’re under financial stress, which makes you a riskier lending prospect.

Fortunately, FICO only counts credit inquiries from the last twelve months, and the inquiries drop off your credit report after two years.

Ideally, you should limit your credit applications to one every six months. Your score shouldn’t suffer too much if you go slightly over, but racking up half a dozen inquiries in one month could have a fairly drastic effect. There is no hard credit pull with Credit Strong products, so you can rest easy should you decide to use a credit builder. 

Monitor Your Credit

Once you have a diverse credit mix and the cash flow to make your payments on time, building credit is primarily a test of discipline. As long as you continue using your accounts responsibly, you’ll have a good credit score eventually.

During this phase of the credit building process, it’s a good idea to check your progress regularly using credit monitoring services.

Fortunately, you can get regular credit reports from most creditors. For example, CreditStrong provides a free copy of your FICO Score 8 each month while you have one of our credit builder loans.

Alternatively, you can get monitoring services through a provider like Credit Karma or Credit Sesame as well.

Frequently Asked Questions

How Do I Begin To Build My Credit?

If you’re building credit from scratch, the best way to start is to acquire a revolving credit account and an installment loan, then use them responsibly. Generally, that means making your monthly payments on time and utilizing less than 10% of your card limit.

It’s hard to qualify for the best credit cards without a good credit history, but you should be able to get a secured credit card despite having no previous credit history. And, of course, credit builder loans don’t require a credit check.

What Is the Fastest Way To Build Credit?

Building credit takes time, but there are a few ways to boost your score in a relatively short period. For example, those include:

• Paying down a significant amount of debt
• Increasing your credit limit to reduce your utilization ratio
• Using reporting services to add years of rental history to your credit reports

That said, it’s usually best not to rush the credit building process, as taking shortcuts can get you in trouble. For example, credit repair services that promise to build your credit fast are often scams.

How Can I Build My Credit in 30 Days?

Building credit in 30 days is often difficult since most lenders report to the credit bureaus monthly. However, you can improve your score in a single reporting period by lowering your credit utilization.

Typically, the best way to do that is to pay off a meaningful amount of your outstanding debt. However, you can also get similar results by requesting an increase of your credit limit.

The post How To Build Credit—The Most Effective Methods  appeared first on Credit Strong.

When it comes to enhancing your credit profile, understanding the difference between credit repair and credit building is crucial. Both are essential components of achieving and maintaining good credit health, but they approach the problem from different angles. In this comprehensive guide, we will explore credit building versus credit repair, the key concepts involved, and how services like CreditStrong and Dovly AI can assist in improving your credit situation.

Differences Between Repair and Building

While both credit building services and credit repair services aim to improve your credit score, they address different aspects of your credit profile. Understanding these differences can help you choose the right approach for your situation.

Credit Repair focuses on fixing past mistakes and errors on your credit report. This process involves disputing inaccuracies, negotiating with creditors, and sometimes using professional help to address negative items on your credit history. Credit repair can lead to quicker improvements in your credit score, particularly if you resolve significant issues or remove major inaccuracies.

In contrast, Credit Building is about establishing a strong credit history and maintaining good financial habits. This involves responsible use of credit, such as making timely payments, managing different types of credit, and keeping accounts open. Credit building is a longer-term strategy that requires patience, as improvements in your credit score develop gradually over time.

While both processes aim to improve your credit score, credit repair tends to offer faster results by addressing past issues, whereas credit building focuses on creating a solid financial foundation for future stability.

Credit Building: Creating a Strong Foundation

Credit building is about establishing new positive credit behaviors. This might involve opening new credit accounts, using secured credit cards, and making timely payments. CreditStrong offers structured credit-builder loans that help users build a positive history through regular, on-time payments, while also saving money.

Credit Building with CreditStrong

CreditStrong is a valuable tool for those looking to build or improve their credit score. It offers structured credit-builder loans designed to help users establish a positive credit history through regular, on-time payments. With CreditStrong, the borrowed amount is held in a secure account, and as you make monthly payments, these payments are reported to the major credit reporting agencies. At the end of the loan term, the funds are released to you, often minus any associated fees.

By integrating CreditStrong into your credit-building strategy, you can enhance your credit while also saving money, making it a practical choice for improving your financial health.

Credit Repair: Fixing What’s Broken

Millions of Americans have no clue there are mistakes hiding in their credit reports weighing down their score, and you might be one of them. Credit repair focuses on correcting those issues on your credit report. If you have errors or negative entries, credit repair companies work to fix these problems. You don’t have to have bad credit to need repair services either. Dovly AI, with its AI-powered dispute technology, helps users efficiently address these issues by automating the dispute process and tracking progress.

Credit Repair with Dovly AI

Dovly AI is a free credit repair tool that focuses on automating and streamlining the repair process. Dovly uses fancy AI to spot problems and work on your behalf to wipe out errors from your credit report, and provides personalized credit tips to help you boost your score.

Dovly AI is a free AI-powered service that focuses on automating and streamlining the repair process. Dovly AI helps users identify and dispute inaccuracies or negative entries with the credit bureaus efficiently. In addition, they have credit counselors designed to assist you in overall credit improvement.

By incorporating Dovly AI into your repair strategy, you can streamline the process of correcting errors and enhancing your credit, making it a valuable asset in achieving better credit health.

Why You Might Need Both Credit Repair and Credit Building

When it comes to improving your credit, using both repair and building strategies together can be a powerful approach. While these two processes serve different purposes, their combined efforts can create a comprehensive plan for enhancing your overall creditworthiness and financial stability.

If your credit report has inaccuracies, credit repair is essential to correct these errors. Mistakes or outdated information can negatively impact your credit score, making it difficult to see the true effect of your efforts to improve your credit.

For those with a limited or poor credit history, credit building is crucial to establish a positive credit profile. This involves demonstrating responsible financial behavior to boost your credit score over time.

Using credit repair and credit building simultaneously can maximize your credit score improvements. Correcting errors clears the way for a more accurate assessment of your creditworthiness, while building positive credit behaviors strengthens your overall credit profile. This combined approach ensures a more comprehensive enhancement of your credit score.

How Dovly and CreditStrong Can Work Together for Your Benefit

CreditStrong and Dovly AI complement each other by addressing different aspects of credit management. Credit Strong helps build a positive credit history through regular payments on credit builder loans, which strengthens your credit profile. Meanwhile, Dovly AI focuses on repairing your credit by identifying and disputing inaccuracies or negative items on your credit report. Together, they provide a comprehensive approach: CreditStrong builds a solid credit foundation, while Dovly AI ensures your credit report is accurate and free from errors, leading to overall improved credit health.

According to Dovly AI’s data, members that use both services see an extra 19pts score increase than those that only use Dovly AI’s credit repair service1 – a quick and effective way to improve credit scores. 

Conclusion

In conclusion, understanding the distinction between credit repair and credit building is fundamental to enhancing your financial health. Credit repair focuses on correcting past inaccuracies and addressing negative entries on your credit report, offering a way to swiftly resolve issues that might be impacting your credit score. On the other hand, credit building emphasizes establishing a strong credit history through consistent, responsible financial behavior, which is crucial for long-term credit health.

To achieve the best results, it’s often beneficial to integrate both approaches. By simultaneously repairing any errors in your credit report and building positive credit habits, you can create a comprehensive strategy that addresses immediate issues and fosters long-term improvement.

Assessing your current credit situation is the first step towards this balanced approach. Whether you are dealing with inaccuracies that need fixing or looking to establish a stronger credit foundation, utilizing services like CreditStrong and Dovly AI can accelerate your progress. CreditStrong helps you build a positive credit history through structured credit-builder loans, while Dovly AI’s advanced AI technology streamlines the credit repair process, ensuring your credit report is accurate and up-to-date.

By leveraging both CreditStrong and Dovly AI, you can effectively tackle credit repair and credit building simultaneously, leading to a faster and more effective path to achieving your credit goals.

Start today to see how CreditStrong and Dovly AI can accelerate your journey to improved credit health and financial stability. Explore their offerings and take the first step towards a brighter credit future.

The post Credit Repair vs. Credit Building: Understanding the Differences  appeared first on Credit Strong.

Consumers today who are struggling with poor credit history may consider seeking assistance from a reputable credit repair company that can help with fixing their bad credit. Keep in mind that most of these companies charge initial and ongoing fees for providing these services.

The Federal Trade Commission explains that fraud is common in this industry and consumers must do their homework before entering an agreement with a credit repair agency.

What is a Credit Repair Company?

Credit repair organizations emerged shortly after the implementation of the Fair Credit Reporting Act in 1970. Credit repair services work on behalf of consumers with negative items on their credit history, such as missed or late payments on debts.  

A credit repair service will access your credit reporting agency files compiled by the three major credit bureaus: Equifax, Experian, and TransUnion. Credit Karma describes the role of a credit repair company as a service that will do the “heavy lifting” for consumers.

A credit repair service is distinct from a credit counseling agency, which provides advice and education, such as strategies for managing existing debt, improving your credit utilization rate, budgeting, and responsibly assessing new credit accounts.

In 1996, the Credit Repair Organizations Act (CROA) was established for regulating the credit repair company market. The Consumer Financial Protection Bureau (CFPB) is the primary agency handling enforcement of the CROA.

How Do Credit Repair Companies Work?

A credit repair company will review a consumer’s credit history and identify any existing negative information. Next, the credit repair company communicates with either the credit bureaus or the companies that reported the negative information associated with any debt.

The company that has furnished or reported unpaid debts or other forms of adverse payment history to the credit bureaus is typically a third-party debt collector; however, it might be the original lender associated with the debt such as a bank or credit card company.

A credit repair company will dispute any negative information that was incorrectly reported on your behalf with the intent of having the adverse entry deleted or modified in a way that reflects favorably on the consumer.

Among the most commonly deployed tools are debt validation letters. Here, a letter challenging the “validity” of the debt requests that the lender or collector present written evidence that confirms the consumer owes a debt, which they might struggle to locate in a timely manner.

Experian states how some unscrupulous companies in the past tarnished the credit repair industry’s reputation. For example, by deploying tactics, such as repeatedly sending dispute letters to parties who reported adverse information — a process known as “jamming.”

The jamming strategies inundate lenders, collectors, and credit bureaus with disputes, which increases the likelihood that a recipient would fail to properly process them within 30 days — the deadline imposed in the provisions of the FCRA.

Are These Companies Legit?

Federal law permits the operation of any credit repair company that complies with the CROA guidelines. In recent years, the Federal Trade Commission (FTC) and the attorney generals of most states have curtailed illegal industry activity.

The FTC recommends that consumers look for the following signs that suggest fraudulent activity as follows:

• The company insists or pressures you to make advance payments before providing any services.
• They discourage you from directly contacting any credit reporting company or bureau.
• The company suggests filing a dispute alleging that a reported debt is inaccurate that you know is correct.
• They suggest providing any type of false information.

Consumers must insist that all terms are clearly presented in writing before entering an agreement with a new credit repair company. The CROA also allows consumers a three-day “cancellation period” without penalty.

The CFPB has now compiled and regularly maintains a Consumer Complaint Database of companies within the financial services sector that were the subject of complaints. The Better Business Bureau (BBB) is another potentially viable resource for researching these companies. 

How Much Does Credit Repair Cost?

According to Experian, companies involved with repairing or improving the credit rating of consumers typically use one of two payments or fee arrangements. The first is a subscription model where the company is paid each month, which often ranges from $50 to $100.

Another common industry fee structure is referred to as “pay per delete.” Here, the credit repair company receives compensation after their efforts successfully have an adverse credit bureau report entry removed (deleted).

The following summary outlines the fee structures that several well known credit repair companies promote. Ovation Credit Services claims they represent the best credit repair company for couples, seniors, and members of the military.

Ovation Credit Services offers an Essentials option for $79 a month or an Essentials Plus plan for $109 a month. 

The Essentials Plus plan requires an $89 initial fee but includes unlimited challenge validation letters and creditor goodwill letters, as well as credit monitoring of your TransUnion report.

Sky Blue Credit Repair offers a plan with a $79 setup fee and a $79 monthly fee. They market the plan as an “all-inclusive” solution that includes debt validation challenges, goodwill letters, and cease and desist letters for stopping repeated calls from debt collectors.

Credit Saint now offers three available credit repair options with an initial fee ranging from $99 to $195 and monthly charges of $79.99 to $119.99. All options include debt validation letters, “intervention” credit counseling (coaching) services, and Score Tracker credit monitoring.

How Long Does Credit Repair Take?

You should not expect immediate results after enrolling in a credit repair program. For example, if your credit report contained an inaccurately reported adverse credit entry, there will be lapses of time in disputing the error, time for investigatory review, etc.

In many cases, it will take up to six months or more before some progress is evident and your credit score noticeably improves. Ask your credit repair company about their expectations. 

Keep in mind that many of these providers also include regular updates for tracking your progress.

Another consideration is that a single adverse credit entry might exist on two or more of the three major credit bureau reports with Equifax, Experian, and TransUnion; therefore, the process could require additional time.  

Keep in mind that the majority of adverse credit report entries automatically fall off your credit report in seven years, with some types of bankruptcy extending to 10 years. With good timing, you might notice improvement regardless of the credit repair company’s activity.

For example, if you initially entered an agreement with a credit repair company just before a major bad credit event, such as bankruptcy, and are approaching the 10-year mark, you might unexpectedly enjoy a good credit score boost.

Can I Fix My Credit By Myself?

According to TransUnion, a consumer can independently work toward improving their credit score using the same strategies as a credit repair company would. Further, TransUnion explained that such do-it-yourself work might produce faster results and will save you money.

Equifax also agrees that consumers may obtain similar results in repairing their credit and boosting their credit score without assistance from a third-party service provider. Equifax also reminds consumers that there is rarely any “quick fix” for dramatically improving your credit.

Although the current credit repair company regulations prohibit making any “guarantees” regarding efficiency, many of these organizations create impressions that suggest their expertise in the realm of credit repair translates to faster results.

In today’s digital age, the major credit reporting bureaus have simple and easy-to-use website applications for filing disputes and otherwise communicating with them. 

Consumers seeking to improve their credit themselves should always begin by obtaining a recent copy of their credit report. Fortunately, all three credit bureaus now provide a free credit report upon request once each year.

Ways to Build Credit

While you’re addressing negative items on your credit report, it helps to also put new items on it. For example, CreditStrong is a Texas-based division of an established bank that received a 5-star rating that provides credit builder loans.

A credit builder loan is a special type of installment loan that deposits the “borrowed” funds into an FDIC-insured savings account. In the months that follow, the individual makes a single, fixed payment toward the balance of the loan.

Throughout the term of a credit builder loan, CreditStrong reports all loan payment activity to the major credit bureaus; therefore, consumers have an excellent opportunity for establishing a positive history of responsible credit usage that can positively impact their credit score.

At the satisfactory conclusion of the loan term, the funds that were secured in the savings account are made available.

Another possible credit repair strategy involves acquiring a secured credit card. A secured credit card requires an initial, refundable security deposit, which is typically equivalent to the maximum credit limit on the account.

Secured credit cards function in the same manner as a traditional credit card account. Using the card responsibly and making timely monthly payments may improve your credit profile and likely enable you to qualify for an unsecured credit card.

Credit repair companies provide a service that may benefit consumers seeking to improve their bad credit history — particularly, as a convenience for very busy people.

Consumers should remember that they can perform the same steps for potentially improving their credit as the credit repair companies take if they take the initiative. 

The post Who Can Help Me Fix My Credit? appeared first on Credit Strong.

Fixing your credit might seem complicated, but it’s actually a simple process. It doesn’t take special expertise to do it and most times, you’re the best person for the job. Not to mention, working with a credit repair company can be expensive. 

Don’t drop hundreds of dollars on credit repair if you don’t have to. You could always take the DIY route by cleaning up your payment history, disputing inaccuracies, and paying down debt. 

Once you realize how simple it is to fix your credit, you’ll wonder why you ever considered a credit repair service in the first place.

Check Your Credit Report & Dispute Any Errors 

The first step to fixing your credit is knowing what it looks like. Recent credit score statistics show that 54% of people never check their credit. Getting a hold of your credit report gives you a roadmap to fix your credit rating. 

There are a few ways you can check your credit report for free: 

• Visit each of the credit bureau websites (Experian, TransUnion, Equifax) and view what’s reporting to your credit for each one. 
• Visit www.AnnualCreditReport.com for a free report once a year.
• Use credit tracking services like Credit Karma for an estimation of your score and free credit reports.

Due to the pandemic, the major credit bureaus currently offer free weekly credit reports from 

AnnualCreditReport.com until April of 2022. So it’s the ideal time to start tracking your credit. 

If you’re planning to use services like Credit Karma, keep in mind the score they give you is a VantageScore. Most lenders use FICO credit scores, so many people don’t consider it to be a “real” credit score. Usually, your FICO scores and VantageScores are similar, but they do differ.  

It’s best to get your credit report straight from the source. After getting your free credit reports, go over them with a fine-tooth comb. You’re looking for errors or inaccurate information. Match up bank statements, major transactions, and balances with your credit file. 

You might not find anything. That’s typical. But if you do, there’s a chance of boosting your credit score by disputing it. If the items on your credit report are all correct, it’s not worth your time to dispute them. Just take responsibility and focus on other strategies for improvement. 

If you do find errors, there are some solid steps you can take to get them removed. 

1. Make a copy of your credit report along with the documents proving the error.
2. Highlight the error(s) on the credit report and send correct documentation with it.
3. Write a letter or process an online dispute with the credit reporting agency you found the error with. Also include an explanation of each error you’re disputing. Attach all the necessary documents they ask for. 

If you’re sending a letter, make sure it’s sent with certified mail and spring for a return receipt so you know it’s been received. Once you start the dispute, the credit bureau has to investigate it within 30 days and respond.

The Federal Trade Commission gives a sample letter for each bureau you can use to start your dispute. You can also find more detailed information about the dispute process on their website.

Improve Your Payment History

Your payment history makes up 35% of your overall FICO credit score. So when your payments are consistently late, it takes a toll on your credit rating. 

The worst part? Missed and late payments stay on your credit history for up to seven years. Even after you’ve caught up on your payments.

The best move to improve your credit score is to get your monthly payments under control. This takes time and planning, but it starts with making a budget. It doesn’t have to be complicated. A simple layout of each bill’s due date and when you get paid can do the trick. 

Take it a step further by reviewing last year’s tax returns and bank statements for accurate figures of how much money you bring home annually and monthly. Then you can start deducting your monthly expenses from your income. Things like:

• Rent/Mortgage
• Student loan payments
• Credit cards
• Personal loans  
• Car note or lease
• Insurance payments
• Utilities 

This is important because you need enough money coming in compared to what’s going out. Then budget for obligations that don’t involve your credit scores. Gas, entertainment, groceries, clothing, hobbies, and savings. 

You could also opt to go digital with your budget. Most banks have online banking with financial management tools or at least a notification system. They allow you to create the same layout, but with less math. 

There are also tons of budgeting apps out there to help you build and maintain a living budget. Money Under 30 listed some of the best budgeting tools sorted by goals. Once you regain control, you can start setting bills on auto-pay so you don’t miss other payments in the future.  

For the bills that don’t allow auto pay, you should pay them as soon as the bill arrives. Don’t let a missed payment from a forgotten bill mess up your progress. Not only could it result in a low credit score, but you could end up with a collection account if it goes unpaid for too long.

Improve Your Credit Utilization 

Your credit utilization is your total revolving debt divided by total available credit. Let’s say you own one credit card with a limit of $5,000. Holding a $2,300 balance on that card brings your credit utilization ratio to 46%. Could be better. Bring the balance to $1,450 and you’re good.

Most experts suggest a credit utilization ratio of 30% or below. This general rule will give you an achievable utilization rate to work towards if your credit card balances are super close to your credit limit. We all have to start somewhere. 

To get the best credit scores that you can, you’ll want to keep your credit utilization below 10%.

Dealing with bad credit as a result of excessive debt can feel overwhelming and impossible at times. That’s why you need a plan of attack. This is where your budget comes in. Set a payoff date and then reserve money each month to chip away at your revolving debt. 

There are other ways you can improve your credit utilization ratio too:

• Consolidate high-interest credit card debt. This can be done with a personal loan, balance transfer, or even a home equity loan.
• Set up alerts with your credit card issuers. Turn on text and email notifications to alert you when you’re close to the credit limit. 
• Increase your available credit. Open a new credit account without using it or request a credit limit increase from your credit card company. Just be careful, a credit limit increase could mean a hard inquiry. 
• Use the avalanche method or snowball method. This can accelerate your debt repayment. 

Aim for 30% to start. Once you gain more experience in your credit journey, you should start going lower. You might be surprised to find that people with 800 credit scores typically keep their utilization below 10%. 

If you have bad credit, your utilization ratio is likely closer to 50% or more. Your utilization is a big part of your credit score, making up 30% of how your score is calculated. 

By keeping your credit utilization ratio low, you’re showing potential lenders responsibility with your available credit.

Paying down credit card debt is an effective way to improve your credit score significantly. 

Pay Off Any Outstanding Debts

Credit repair organizations can help you dispute inaccurate accounts on your credit history, but they can’t erase outstanding debts. If you have accounts in collections affecting your credit scores, there are a few things you can do to improve your credit or give you a fighting chance. 

Before you contact a credit repair company, try these tactics first to tackle outstanding debts: 

• Arrange a payment plan with your creditor. If you’re unable to pay the original unpaid or collections balance, your creditor might offer a payment plan instead of taking the loss. If that works, be prepared not to miss any payments.  
• Pay off the outstanding debts in full. If you come into extra cash, you can save yourself some credit issues. Paid collections accounts still show on your credit report and affect your score, but future lenders are more likely to work with you if they’re closed and paid.
• Work with a credit counseling service. The National Foundation for Credit Counseling offers help for people struggling to manage debt. They review your credit profile and develop a payoff plan with you. They may even negotiate with creditors on your behalf.
• Wait it out. If all else fails, keep in mind that unpaid/collections accounts stay on your credit report for seven years from the last missed payment. If it’s already been a few years, you might be able to wait until it falls off for your credit to improve.

Don’t Close Old Credit Cards

Keeping your credit cards open after you’ve gathered the discipline to pay them off seems counterintuitive. Trust me – you don’t want to close your old credit cards after you’ve paid them off. You might think you’re making the responsible move, but it has the opposite effect.

Here’s why you don’t want to close those old credit cards:

• Lowers your average age of credit history
• Reduces your available credit
• Could raise your credit utilization ratio

If your credit card isn’t charging you an annual fee, then keep it. Be aware that some creditors have a policy of closing inactive credit cards, which also drops your credit score. To avoid this, you can make a small purchase every few months and pay it off. 

In some cases, it still makes sense to close the credit card though. If you have a costly annual fee or don’t trust yourself with the available credit, it might be less trouble to close it. You should also close it if it’s an old secured credit card from before you transitioned to an unsecured card. 

Get your security deposit back and close out the old secured card!

Don’t Take Out New Credit Unless You Really Need It

When you start improving your credit, you’ll notice something strange. The higher your credit score gets, the more credit accounts are offered to you. Getting your first credit card offer in the mail is often a validation of moving in the right direction. Just don’t jump at the chance to apply.

Other times it can be downright annoying.

Shopping at Target–  You’re pre-approved!

Opening your email– You’re pre-approved!

Making a deposit at the bank– You’re pre-approved! 

Yes, I know. Now, leave me alone. Thanks to a provision in the Fair Credit Reporting Act, you could choose to opt-out of those prescreened offers to take the pressure off. 

Don’t get me wrong, these are good problems to have. However, It can be tempting to open new credit accounts just because they’re available to you. Don’t fall for the trap. The only time you should apply for new credit is when you need it. 

Why? Because each new credit application creates a hard inquiry that stays on your credit for two years. The impact on your credit score for each one is small, at a loss of one to five points each, but these can add up. Remember, you’re in this to improve your credit score. 

Don’t postpone your goal to rebuild credit by overdoing it on new credit applications. Instead, choose your hard inquiries wisely and try to limit them to important purchases. That could be a:

• Car loan
• Mortgage or new apartment
• Setting up utilities
• Debt consolidation loan

When you do need to apply for a new credit account, like a car loan or mortgage, be sure to shop around to different lenders within a 14-day timeframe to have all similar inquiries counted as one. (Note that this shopping window does not apply to credit cards.)

FAQs

Can I Pay Someone To Fix My Credit?

You can pay a credit repair agency to fix your credit. Before signing up, you should know the limitations to what they can accomplish. In some cases, it might be more useful to do it yourself anyway. 

Plus they’re usually expensive. On average, they charge anywhere from $50-$100 per month, and it takes up to a year to reach the finish line. 

Reputable credit repair companies should advise you on timely payment practices and attempt to remove errors from your report, but not much else. The same thing you’re reading about now. For free. 

They don’t have the power to remove anything that isn’t inaccurate. So it’s the same thing do it yourself credit repair aims for, but it costs you hundreds to thousands of dollars, according to Experian. 

Untrustworthy credit repair companies are notorious for scamming customers with practices prohibited by the Credit Repair Organizations Act (CROA). If you’re still considering hiring someone to fix your credit, watch out for these red flags: 

• Promising to remove old debts even if they’re accurate. They’re not capable of doing that. They may misrepresent your information to credit bureaus.
• Not giving an estimate of how much time or money it will take.
• Offering to create a new identity using a credit privacy number.

How Fast Can You Repair Bad Credit?

Repairing poor credit takes time. There’s no avoiding that. Still, you can’t help but wonder how long it takes to build credit. 

Take your pick. Credit counseling, credit repair service, or DIY – No matter what method you choose, you should be thinking months, not days. At a minimum, you need three months to see any measurable improvements in your score. Getting to good credit takes some people years. 

For Credit Strong credit builder loan users, the average improvement after three months of on-time payments is 25 points. The average credit score impact after 12 months was 70 points. Overall, it depends on where your credit score is now and how far your goal is. 

How Can I Raise My Credit Score in 30 Days?

Raising your credit score in 30 days is tricky. Disputes may not work because it takes 30 days just for the credit bureaus to investigate. Creditors only report to the credit bureaus once every 30 days in most cases. You may have to adopt several tactics at once.

• Opening a credit builder loan.  
• Getting a credit limit increase in order to drop your credit utilization rate.
• Paying down other high-interest debt. 

Even if you’re doing all of these, the timing has to be precise for all of the improvements to show up within 30 days. Again, rebuilding your credit isn’t a short-term process. 

All in all, fixing your credit on your own will empower you to take control of your finances. You don’t need to pay a credit repair agency hundreds of dollars when you know your finances the best. It also makes you rethink your relationship with credit and debt. 

The steps you’ll have to take are simple in theory, but putting them into practice can be difficult at times. Start small with finding out where you stand by getting a free credit report. From there you can dispute inaccuracies, build a budget, and start paying down debts over time. 

Make it a habit to check in with your credit history by making the most of annual free credit reports. Once you rebuild your credit, the maintenance process becomes easier and easier. 

The post How to Fix My Credit Myself and Save Money on Credit Repair appeared first on Credit Strong.