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How to Fix Your Credit Score, Little by Little

Credit Score and Coffee

Is your credit score preventing you from qualifying for the best loan rates or from being approved for a loan? Do you feel like you don’t even know where to begin to get your credit back on track? Have you been ignoring the problem because facing it head-on simply feels too daunting? If you answered yes to any of those questions, you and millions of other Americans are in the same boat. Fret not! Getting your credit back on track doesn’t have to be as formidable of a challenge as you may have thought!



My aunt taught me a valuable life lesson as a child that has always stuck with me. When faced with adversity, tackle it head-on, little by little. She took me skiing on a run that was very steep, icy, and filled with moguls. I was sure I’d never make it down the mountain alive and started panicking. She pointed fifteen feet down the hill and asked me if I could make one turn and stop where she was pointing. The slope didn’t appear nearly as steep when I only looked a short distance ahead. Suddenly I didn’t feel quite as intimidated. I reluctantly replied yes and proceeded to do as she had instructed. One turn and one stop at a time, I made it all the way down the mountain safely. Since then, when faced with an overwhelming challenge, I always remind myself to proceed one step at a time or bit by bit, knowing that I will eventually achieve my goal.

As you start to address your credit blemishes, think of each of the following steps as a goal in and of itself. As you tackle each step, give yourself a huge pat on the back for accomplishing that goal. Bit by bit, you will accomplish your larger goal of cleaning up your credit. This will help you to feel less overwhelmed and will decrease your likelihood of giving up on your goal altogether!



You can’t tidy up your credit if you don’t know what needs tidying. Don’t be scared! You’ve got this. For many people, this is the most difficult step. But, you have to start somewhere and reviewing your credit report is a great starting place.

I recommend that you visit Annual Credit – Home Page to obtain free copies of your credit report from all three major credit reporting bureaus—TransUnion, Equifax, and Experian. Although you may find that all your credit reports contain identical information, it is possible that the information may differ from one report to the next, so it’s worth your while to request all three.

Now that you have your credit reports, what information should you be looking for? Great question.



For starters, you should ensure that all information is accurate. Are your balances, payment history, dates, credit limits, and personal information reporting correctly?



Look for duplicate accounts. Oftentimes accounts are sold from one creditor to another or from one collection company to another. This could cause you to appear to have more debt than you really have.



Collections and charged-off accounts are debts that are severely delinquent, and the creditor feels that the likelihood of receiving payment is not good. Having unpaid collections or charged-off accounts not only adversely affects your credit score, but it also affects your likelihood of qualifying for a new loan. Do you see any accounts listed that are coded as collections or charged-off? If so, are they reporting unpaid balances? You’ll want to address any collections or charge-offs with unpaid balances.



Your credit score is composed of many factors but the one with the greatest impact is your payment history. Payments are reported as late if they are made 30+ days after the due date. Review each account to ensure that any payments that are showing as late are reporting accurately. Any late payments that are reporting incorrectly will need to be disputed. If all of your reported late payments are accurate, start to think about ways that you can keep those payments current. If you don’t feel like you can afford to pay any past-due balances, speak to your lender. Many lenders will offer deferrals or loan modifications to help you get back on track. The more time that lapses from your last late payment, the more you’ll see your score improve.


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So, you’ve reviewed your credit reports, taken any necessary steps to protect your identity, and you’re ready to take the next step to tidy your credit.

As noted above, it may behoove you to dispute inaccurate information on your credit reports. The exception to this rule is if the misinformation is minor and has no impact on your score. An example of this could be an incorrect prior job title or former address.

Any missing accounts; incorrect personal information (social security number, current address, date of birth, name, aliases, etc.); or incorrect information related to payment history, balances, credit limits, or duplicate accounts should be disputed. Additionally, if you discover any accounts that you’re not familiar with or any inquiries that weren’t made by you, you should also file a dispute.

While you can dispute an account with the creditor, I recommend filing disputes directly with the three credit bureaus, TransUnion, Equifax, and Experian. Disputes can be filed online, by mail, or by phone.



Dispute Credit Report: How to Dispute | TransUnion

TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19016-2000




Dispute Credit Report Information at


P.O. Box 4500
Allen, TX 75013




File a Dispute on Your Equifax Credit Report | Equifax®

Equifax Information Services LLC

P.O. Box 740256
Atlanta, GA 30374-0256



Each credit bureau’s dispute process varies slightly so check each credit bureau’s website before starting the dispute process to familiarize yourself with their specific requirements. In general though, be prepared with the following information:

  • Creditor name(s) and account number of disputed account(s).
  • Specific details of disputed information and the correct information that should be reported in its place.
  • Documentation to support your dispute(s) (letters from creditors, statements, etc.).
  • Proof that an account was the result of identity theft, if applicable (police report).

You may be asked to provide personal identifying information (state or federal issued ID, social security number cards, utility bills, or bank statements).

Lastly, you may either need to write a letter or complete a form if submitting the dispute via mail. Visit Sample Letter for Disputing Errors on Your Credit Report | FTC Consumer Information to access a sample dispute letter to use as a template.

You should expect to hear back from each credit bureau within 30 days of the date you submitted your dispute. Any verified misinformation will be corrected. If the credit bureau doesn’t agree with you, the information will remain on your credit report. If you feel strongly that the information is reporting incorrectly, your only recourse at this point is to contact the Consumer Financial Protection Bureau by visiting Submit a complaint | Consumer Financial Protection Bureau (



Did you know that most unpaid debt will report on your credit for seven years since the date of last activity on the account? While its impact on your score reduces over time, it continues to tarnish your credit history and has the potential to prevent you from qualifying for a new loan. Paying off, making a settlement, or setting up a repayment plan to clear up your collections and charged-off debts will help you to restore your credit rating and will also increase your likelihood of getting approved for future loans. Focus on paying off, settling, or creating repayment plans on your newest collections/charged-off accounts first to have the greatest impact on your score.

It is important to note that there is a statute of limitations on unpaid debt that regulates the amount of time that a creditor may file a lawsuit against you to collect on a debt. Creditors may continue to attempt to collect on a debt that has exceeded its statute of limitations, but if they threaten you with legal action, they may be in violation of the Fair Debt Collection Practices Act. To learn more about the statute of limitations, check with your state attorney general’s office or your state’s legal aid office.

When paying off, settling, or creating a repayment plan on your collections or charged-off debt, be sure to obtain a written copy of your arrangement and ask for the name and extension of the agent you speak to. Although the debt collector may not provide all the above to you in writing, I recommend asking them to do so to protect yourself from them changing the terms of the agreement.



If you pay the entire balance of a collection or charged-off debt all at once, it is considered a payoff. This is the preferred option compared to settlements or repayment plans as it will clear up the debt quickly and it shows you made good on your credit obligation in full.

Before paying off the debt, ask the creditor or collection company agent if they will remove the account from your credit report as a condition of the payoff. The agent may not agree to this term, but you don’t get what you don’t ask for, so it’s worth a try. If the agent is unwilling to do this, you’ll want to confirm that, at a minimum, they will be marking the account “Paid in full.” Ask them to include this detail in the letter you requested that outlines the terms of your repayment of the debt.



A settlement is made when you work out an agreement with a creditor or collection company to make a lump sum payment for a reduced amount from the total you owe on the debt. I would typically advise you to try to make settlements directly with your creditors, however; in some instances, it may behoove you to work with a debt management company for assistance with this. Making a settlement is the best way to save the most money on rectifying your old bad debts.

You’re more likely to successfully make a settlement on older accounts and/or collections. Older accounts and collections often have interest and fees that have been tacked on that creditors may be willing to waive. Older accounts are also more likely to have been sold from one collection company to another. The more times an account has been sold, the more likely the collection company will be willing to settle.

Much like a payoff, you’ll want to ask to have the debt removed from your credit report once the settlement amount has been paid, as a condition of the settlement. If the agent is unwilling to do this, try asking them to commit to marking the account “Paid in full.” Again, you may also strike out with this request, but it’s worth a try. At a minimum you want to confirm that the account will be marked “Settled for less than full balance.” Having an account marked in this way is not as ideal as having it show that it was paid in full, but it at least shows that you took steps to resolve your bad debt. Ask them to include this detail in the letter you requested that outlines the terms of your repayment of the debt.

Beware that any amount of your debt that is forgiven as part of your settlement agreement may be considered income to the IRS. Check with your tax advisor to learn more about how this could affect you.



If you do not have the money to pay off or settle a debt, setting up a repayment plan is one way to show that you are working towards rectifying your bad debt and will help to put you a step closer to having an all-positive credit history.

Before proposing a repayment plan, be sure to complete a budget to ensure that you will be able to afford the payments. A budgeting app is a great tool for keeping up with your obligations and learning how much additional money you can afford to pay towards your collections or charged-off debts. Visit The Four Best Budgeting Apps Worth Paying For ( to learn more about budgeting apps.

Debt collectors are not required to accept the terms you propose for a repayment plan but generally will be willing to work with you if your proposal will have the debt paid off in a short period of time; shoot for three to six months.

Don’t forget to inquire about how your credit will be updated. Ideally, the creditor or collection company will update your balance on your credit report monthly and will indicate that the debt was a charge-off that is now being paid. Much like a settlement, try negotiating to have the debt removed from your credit once it is paid in full. If you’re unsuccessful with this, ensure that that the account will be marked as paid in full once you have completed making all the payments. Make sure they include these details in the letter you requested.



If you’re still reading this, you’re a trooper. I know this information can be difficult to digest-especially if you haven’t been giving your credit any TLC in a while but you did it! You have read through all of the steps you need to complete in order to tidy up your credit, little by little. As you begin the process of tidying up your credit, don’t be afraid to ask for help. Make an appointment to speak with a consultant at your local financial institution or reach out to a certified financial counselor.

Repairing credit unfortunately isn’t as easy as removing errors and issues from your credit report. While you work on cleaning up old blemishes, you also need to focus on keeping all of your active credit positive. Click here to learn more about how your credit score is calculated and what to focus on to have a great credit profile.

Credit blemishes don’t appear overnight, and they won’t go away overnight. Remember the life lesson my aunt taught me. When faced with adversity, tackle it head-on, little by little. You can do this! You can repair your credit and build a great credit profile. I believe in you!


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Abbi Kiley

About Abbi Kiley

With nearly two decades of experience in the financial industry, and well over half of that at VSECU, Abbi Kiley has become a trusted resource and ally to countless members. Although she grew up in the shadows of Manhattan, her love of hiking, swimming, gardening, and all things outdoors helped her to realize that she and Vermont were perfectly suited for one another. She has been proud to call Vermont home since moving here in 2002. She takes great pride in helping people gain or improve their financial stability and in turn have a better quality of life.
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