8 Steps to Fix Your Credit Report and Raise Your Credit Score

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 yet 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 a free copy of your credit report 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.). Be aware that it won’t show your actual credit score or typically have information on your bank accounts, income, or utility or rent payments.

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 specific credit bureau that produced 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.

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. Just be sure to get the agreement in writing!

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.

Note that as collections or late payments get further in the rearview mirror, they’ll have less of an impact on your credit score. It will still show up on your report for seven years (even after it’s paid off), but building up a positive payment history will help reduce the negative impacts.

Make payments on time

Moving forward, do what you can to make all of your payments on time. You definitely don’t let them get more than 30 days past due.

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. A budget or money management plan could be helpful to make sure everything is getting paid on time.

If you are still having difficulty making payments, contact your lender(s) as soon as possible to discuss potential options.

Reduce revolving credit

Revolving credit is a type of unsecured credit that renews as you pay down your debt. Revolving credit often comes with a high interest rate because it is not secured by an object. A credit card is a prime example of this type of credit.

It’s good for your credit score when you use a credit card for credit building purposes: small, recurring charges (think subscriptions) that you can pay down each month. It’s bad for your credit score when you have too much revolving debt and can’t keep up with the payments. It doesn’t help to carry a balance or pay interest, so your best bet is to pay off credit card debt and other revolving debt.

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 take out your next loan.