3 Steps to Improve Damaged Credit

Achieving a perfect credit score is not easy. The FICO scoring method ranges from 300 to 850 points. Yet, a paltry 1.6% in the US have the perfect 850 scores.

Now here is one thing you may not know – as long as your credit score is about 760, you are good. Indeed, you get the same benefits as that one who has an 850 score. That means access to some fantastic loan facilities. Lenders are always willing to give reasonable rates to those whose risk profile is low.

Landing some high-profile jobs will also be easier with a good credit score. You won’t even have a problem renting an apartment or building. Like lenders, landlords want assurance you will keep up with obligatory payments.

Skipping or delaying payments can hurt your credit score. Credit card companies that report to the reference bureaus, for example, will share the delinquency reports. It can lower your credit score quite a bit.

Now, what you may not know is that other factors can damage your credit report. We will share more details as we show you the steps to improve the damaged credit.

Understanding the Nuances of Credit Scores

The credit reference bureaus look at several factors when scoring. These include debt repayment history, credit history length, hard inquiries, and more.

Even though you have been pretty prudent about debt repayment, you may observe that your credit scores are not improving. This could be due to factors other than those we have highlighted above.

An error in your credit report is one issue. Any inaccuracies in the entries can impact your credit score. Hard inquiries every time you apply for credit facilities are another factor. Have this in mind as we look at how to fix a damaged credit report.

1. Correct Any Inaccuracies

The primary credit reporting bureaus are Equifax, Experian and Transunion. They receive information from creditors.  This information then goes into your credit report. You have a responsibility to ensure that all the information within is accurate.

There could be instances of inaccuracies or mistakes in the report. These include:-

  • Wrong personal information
  • Mixing of your account details with someone else’s. It can happen if you share similar names.
  • Incorrect entries such as wrong amounts or money you did not spend. Such incidences typically arise when there has been identity theft.
  • Closed accounts reflecting as open in the credit account
  • Reporting late or delinquent accounts, even if you are up to date with payments

Please note the list above is not exhaustive. The most crucial step is to correct such mistakes as soon as possible. The reference bureaus have dispute resolution portals.

But anyone who has gone through the process knows how difficult and time-consuming it can be. If you want a quick resolution, the best option is to hire credit repair professionals. They know what to look for in terms of mistakes.

Repair professionals will take on the hassle of dealing with the bureaus. They can also provide continuous monitoring of your credit reports. That way, you can take quick action before the mistake harms your credit report.

2. Negative but Accurate Reports

It is possible to have negative entries in your credit report. Bankruptcies, late payments, and charges are examples. Such can harm your credit score. Please note that as long as they are accurate or true, there is nothing you can do about it. Be wary of any credit repair company that promises to remove such entries from your report.

The negative entry will stay on your account for up to seven years from the original date. It is up to you to ensure that all the entries in a credit report are accurate. And, it requires that you keep up with debt repayment to avoid getting into such situations.

If there is a negative report that has nothing to do with you, it is a mistake. In such a case, you can dispute the entry. As we said, the credit repair professionals will keep a close watch on your credit report. It makes it easier to flag such issues. If you depend on the yearly report, it can take time to notice the mistakes.

3. Other Ways to Fix Damaged Credit

Debt repayment: Prudent money management can help fix your credit report. Repayment history accounts for 35% of the final score. That means keeping up with repayments can help improve your credit score.

Limit hard queries: Every time a lender runs a hard inquiry, it hurts your credit score. It gets worse if there are too many of such inquiries. So if you are applying for loans, take one at a time. Applying for many will result in multiple hard inquiries at the same time. It could also signal to the lenders that you are rather desperate, which could work against you.

Credit cards: Keep old credit cards open, even if you no longer plan to use the card. Credit history takes up to 15% of the score. The longer your card stays open, the longer the credit history.

Credit utilization: Do not exceed 30% on your credit card utilization. The closer to zero percent, the better. Indeed those with a perfect 850 score never exceed 6%. Please note that credit card utilization accounts for 30% of credit scoring. Even if you exceed the limit, avoid revolving balances and pay within the grace period.

Final Thoughts

It is everyone’s wish to achieve the perfect credit score of 850. But improper money management can damage your credit.

The lenders will report your inability to keep up with the payments to the credit bureaus. The latter will, in turn, reflect the same on your credit report.

Adopting healthy money management strategies is the best way to fix credit.

Another critical step is to keep up with monitoring your credit report. Any mistakes in the entries can harm your credit score. It can be very frustrating, especially if you try to keep up with debt repayment.

Consider it an investment to enroll the services of credit repair professionals. Not only will they help with dispute resolution, But they will also keep a close watch on your credit report. That way, they can flag any inconsistencies as soon as they arise.

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