If you want to repair your credit in 2018, look to the best-of-the-best blogging we did on the subject in 2017.
Collectively, these comprehensive, easy-to-follow posts will tell you everything you need to know about repairing your credit — this year, or any year — from a 20-step DIY guide to 22 credit monitoring options. Get the facts and get to work!
In general, DIY credit repair is pretty straightforward. You clean up your credit reports, deal with outstanding debt, and practice good credit-building habits going forward. But to make all of that happen, you need a detailed roadmap on how to:
- Request and analyze your credit reports
- Write, send, and follow up on credit dispute letters
- Use debt validation with collection agencies
- Deal with “zombie debt”
- Decide whether to add personal statements to credit reports
- Pay delinquent debts that have not been charged off
- Pay down outstanding credit card balances
- Negotiate a pay for delete
- Settle debts for less than you owe
- Monitor your credit
- Submit complaints to the CFPB
- And more
No matter which step you’re on in the DIY credit repair process, there’s a tool that makes it easier. Some are free, others come with a fee. So before you delve in, review all of the tools at your disposal.
Free tools you don’t want to miss:
- Credit Karma
- Experian CreditWorks Basic
- Discover Scorecard
- Dispute letter template
- Debt validation letter template
- Zombie debt letter template
- Remove inquiries letter template
- Goodwill letter template
- Banking apps
- Budgeting apps
- Fraud alerts
And tools that come with fees (and that you may decide are worth the cost):
- FICO Score 3-Bureau Report
- FICO Ultimate 3-Bureau Credit Monitoring
- Secured credit card
- Credit builder loan
- Rent reporting service
- Credit freeze
In the wake of the Equifax hack, it is recommended you place a credit freeze – also known as a security freeze – on your credit files. This way, if anyone tries to open credit in your name, the creditor won’t be able to check your credit when trying to qualify you.
Yet, as helpful as a credit freeze may be in protecting you from fraud, it can make a couple of things more challenging during the credit repair process. While a credit freeze is in place, 1) many free credit monitoring services won’t work and 2) you won’t be able to apply for new credit (when trying to build it back up).
Repairing bad credit doesn’t end once you’ve dealt with your negative credit history. It continues with all the steps you can take to ensure a positive credit future:
- Pay all your bills on time, every time
- Be mindful of your credit mix
- Shop around for the best credit terms
- Apply for credit offers compatible with your credit score
- Minimize credit applications
- Use no more than 10 to 30 percent of revolving credit at a time
- Pay off your credit card balances every month
- Think twice about canceling credit cards
- Monitor your credit
It’s easy to have a love-hate relationship with the credit bureaus.
On the one hand, it is because credit bureaus collect payment history from lenders that you are able to establish the kind of credit that qualifies you for new accounts, and under the best terms.
On the other hand, the credit bureaus are unforgiving when you have trouble making your payments. No matter the situation, it gets recorded and stays on your record for years to come.
What’s worse is when the credit bureaus (or data furnishers) make mistakes, hurting your credit through no fault of your own.
Fortunately, the credit bureaus have a system in place for you to submit a formal dispute regarding any listing that you believe is inaccurate or unverifiable — an absolute must during the credit repair process. To that end, find out where credit bureaus get their information, how they turn it into scores, how to write and submit your disputes, and how credit bureau investigations work.
It’s pretty common knowledge that you need to check your credit reports, especially during the credit repair process. But some other things aren’t quite so clear, like which reports you need to see, where to get them, how to read them, and what you’re looking for.
- What credit report actually means
- What’s on a credit report
- Where they come from
- Why they matter
- How credit reports are organized
- Who can see them
- How to get them
- Which ones you need to see
- Using your credit reports for credit repair
- When negative listings fall off credit reports
- Using them to detect identity theft
In an oft-cited study, the FTC found that 1 in 5 consumers had an error on their credit reports that was corrected by the credit bureaus after it was disputed. That’s pretty good odds, making it well-worth your while to take the time and effort to look for errors and dispute them when you are trying to repair your credit. The question is, what should you be looking for?
The list of specifics is long, but, in general, you want to look for:
- Incorrect personal information, account details, amounts, and dates
- Multiple listings of the same debt
- Previously removed listings reinserted
- Settled accounts not reflected as such
One of the biggest misconceptions people have about credit scores is that you only have one of them. In fact, there are hundreds of algorithms out there that companies may use to generate credit scores. That said, FICO and VantageScore are the most widely used and known, so those are the two we focus on in this post (i.e., the ones you need to be most concerned with improving).
- The difference between credit scores and credit reports
- How credit scores are helpful
- How they’re generated
- The credit score scale
- Types of credit scores (FICO vs. VantageScore)
- What’s included in a credit score and what’s not
- Which credit scoring model (and version) lenders use
- Who can see your credit scores
- How often you should check your credit scores
- Where to get your credit scores
- When you receive credits score notices
- Understanding reason codes
- How to improve credit scores
If you have bad credit, the more comfort you may take in the possibility of alternative credit scores improving your creditworthiness. But how much good can they really do? Alternative credit scores might get you approved for some types of credit, but is it worth the price you’ll likely pay for subprime interest rates? Weigh the pros and cons, and find out who generates alternative credit scores and which creditors use them to make lending decisions.
Whether you are repairing your credit, or just trying to maintain the good credit you already have, monitoring your credit is an absolute must. Fortunately, you have plenty of options, some free, others for a fee.
Free credit monitoring
You can get free credit monitoring through:
- Credit Karma
- Experian CreditWorks Basic
- Some credit card issuers
Other circumstances make you eligible for free credit reports, including:
- Receiving an adverse action notice
- Receiving a risk-based pricing notice
- Having a change made to your credit report due to a dispute
- Belief that your credit report is inaccurate due to fraud
- Being unemployed and looking for work
- Receiving public welfare assistance
- Living in a state that provides you with a free credit report
Paid credit monitoring
Though free credit monitoring is obviously ideal, there may be circumstances in which it’s worth paying for. Of the paid offerings out there, we recommend:
- The credit bureaus themselves (e.g., Experian, TransUnion, Equifax)
Up until recently, you had numerous options for free credit monitoring. But now that you need to keep a credit freeze in place pretty much all the time (again, in the wake of the Equifax hack), your options are more limited. Because, unfortunately, not all free credit monitoring sites will work while a credit freeze is in place. Obviously, you want to take advantage of free options, but not at the expense of unfreezing your credit and making yourself more vulnerable to fraud.