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How to fix your credit report and raise your credit score

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Your credit score is a good tool for measuring your financial well-being. Your score shows how good you are at paying bills on time, how much revolving debt you’ve taken on, and any debt you have neglected to pay off. Your credit report delivers your credit score. This is kind of like a report card, showing your overall credit score and the reasons for the low or high score.

If your score is low, you may find that you aren’t able to get the best interest rates on a loan. In extreme cases, you may find that lenders are not able to lend to you. If either of these are an issue for you, you will want to check your credit report to find out what the problem is and start fixing it now. Here are eight steps that can help guide you as you raise your credit score. You can also work with your financial institution for additional help.


Obtain a free copy of your credit report

You can get one free copy of your credit report per year and it will not hurt your credit score. Some credit inquiries will take a toll your score, but you don’t have to worry about this one. Every credit report includes your basic identifying information (name, address, Social Security number, etc.), your credit accounts (loans, lines of credit, etc.), credit inquiries, and public record and collections information (overdue debt, bankruptcies, foreclosures, etc.).


Review and dispute errors

Once you’ve obtained your credit report, check it for errors. Does anything look unfamiliar? Do you see any charges that you did not make? Any inquiries you did not approve? Is your personal information correct and up to date? Read the report carefully to make sure everything is correct. To remove errors from your credit report, you will have to reach out to the credit reporting agency that wrote the report. You will also have to contact the company or person who is owed money. Click here to find instructions for taking care of errors with the three major credit bureaus. It will take some time for your credit score to bounce back. Don’t feel discouraged. You will see an improvement over time once the charges have been paid or removed.



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Note and resolve past due and charge off accounts

A charge off account is a loan that went delinquent and the lender, recognizing that it was not going to be paid, wrote it off. This type of debt can have a huge negative impact on your credit report, so it is important to resolve charge offs immediately. Whether the account is charged off or simply past due, contact the creditor and make a payment arrangement. Many times you’ll get a zero percent interest rate on a charge off agreement because the lender had already written it off; they’re often happy to agree to a payment plan, as long as you stick to it. Request a history of your payments from the lender every six months to make sure that it is accurate. Many charged off accounts won’t list payments to your credit report, so you can also use the history to prove to a new lender that you have been paying down the charged off account.


Make payments on time

From now on, make all of your payments on time. There may be reasons why you have missed payments in the past. This is the time to eliminate those reasons. If you have too many payments each month, see if you can consolidate your loans. If you have poor cash flow, consider taking on a new job or eliminate unnecessary monthly costs. If you are in dire straits, you may have to develop a strict budget to help you make ends meet. A customer service representative or branch manager at your financial institution may be able to help you come up with solutions, so don’t be afraid to ask.


Reduce revolving credit

Revolving credit is a type of unsecured credit that renews as you pay down your debt. A credit card is a prime example of this type of credit. Revolving credit often comes with a high interest rate because it is not secured by an object. It is therefore a high risk investment for the creditor. Both too much and too little revolving debt can affect your credit score. It’s good for your credit score when you pay revolving debt down every month. It’s bad for your credit score when you have too much revolving debt and can’t keep up with the payments. Your best bet is to pay down your credit card debt and other revolving debt and eliminate excess credit cards.


Maintain a good mix of credit types

Though you don’t want an excess of revolving credit, your credit score improves when you maintain a good mixture of credit types. A good mix will include long-term and short-term loans as well as secured and unsecured loans. People who have many types of credit are seen as strong borrowers. On the other hand, not having enough credit can reduce your credit score. Without any credit, you will get a higher interest rate on your loan when you go to make your next car purchase.


Don’t make unnecessary purchases

As you’re improving your credit score, it’s best not to take on more debt unless you absolutely have to. The more debt you have, the worse your debt-to-income ratio looks. Your debt-to-income ratio indicates how much debt you have in comparison to your income. It also indicates whether you have enough income to pay off your debt. The higher your ratio, the less income you have to pay down your current debt.


Check your credit score regularly

As noted at the beginning of this article, you can check your credit score for free every year. Each credit bureau (TransUnion, Equifax, and Experian) offers a free credit report each year. If you request a report from each one, you can check your report three times a year without hurting your credit score. At the very least, you should check once a year, to ensure that everything is in order.


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About Christine Davidson

Christine Davidson is a former employee of VSECU. She has two children and lives with her husband in Northfield.
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