Credit Repair: Guide to Fixing Your Credit by Lexington Law

Understanding Credit Repair

Having good credit repair is essential for securing loans, getting lower interest rates, and achieving financial freedom. But what happens when your credit score is less than perfect? This is where to look for credit cepair companies. Whether you’ve faced financial difficulties or have errors on your credit report, repairing your credit can improve your financial health over time.

In this guide, we’ll walk through the steps of credit repair, common mistakes to avoid, and how to maintain a healthy credit score.

Credit repair is the process of identifying errors or inaccuracies on your credit report and taking action to fix them. It also involves managing your debt responsibly to improve your overall credit score. You can do this yourself or hire a credit repair company to handle the process, though it’s important to understand the steps involved before making a decision.

Step 1: Review Your Credit Report

The first step in credit repair is understanding where you stand. You’re entitled to one free credit report per year from each of the three major credit bureaus: Experian, TransUnion, and Equifax. It’s important to request a copy of your credit report and review it thoroughly for errors.

Look for:

Incorrect personal information (name, address, etc.)
Errors in account details (wrong amounts, status, etc.)
Duplicate accounts
Fraudulent activity (accounts or charges you didn’t make)

Step 2: Dispute Credit Report Errors

If you spot errors on your credit report, it’s crucial to dispute them as soon as possible. The Fair Credit Reporting Act (FCRA) allows you to challenge incorrect or inaccurate information.

To dispute an error:

Contact the credit bureau where the error appears (Experian, Equifax, or TransUnion).
Write a letter clearly explaining the error and provide supporting documents.
The credit bureau is required to investigate the issue, typically within 30 days.

If the dispute is resolved in your favor, the inaccurate information will be removed or corrected, potentially boosting your credit score.

Step 3: Pay Down Outstanding Debt

One of the biggest factors in your credit score is your debt-to-income ratio, specifically credit card balances. High credit card balances can drag down your score, even if you make your payments on time.

Focus on paying off high-interest debt first to reduce the total amount you owe.
Consider using the debt snowball method, where you pay off your smallest balances first to gain momentum.
Avoid closing old credit accounts, as doing so can negatively affect your credit utilization ratio.

Step 4: Make Timely Payments

Payment history accounts for 35% of your credit score. Late or missed payments can have a significant impact, so it’s essential to make sure that all bills are paid on time.

Set up automatic payments for bills to ensure you never miss a due date.
If you’re struggling to keep up, contact creditors to see if they offer flexible payment options or a hardship plan.

Step 5: Rebuild Your Credit Responsibly

Repairing your credit is not just about fixing errors—it’s about building a strong credit history over time.

Use a secured credit card: This type of card is designed for people with bad credit and requires a deposit that acts as your credit limit. Responsible use of a secured card can help rebuild your credit.
Become an authorized user: If someone with good credit adds you as an authorized user on their account, their positive payment history could reflect on your report.
Diversify your credit mix: If possible, have a combination of different types of credit, such as installment loans and revolving credit (credit cards), as it can positively impact your score.

Common Credit Repair Pitfalls to Avoid

While repairing your credit is possible, there are some common mistakes that can slow down your progress or even make things worse:

Applying for too many credit cards: Each application results in a hard inquiry on your credit report, which can lower your score.
Closing old accounts: This can shorten your credit history, which negatively impacts your score.
Ignoring small debts: Even a small unpaid debt can cause big damage if it goes into collections.

Should You Use a Credit Repair Service?

Credit repair companies offer to handle the process for you, including disputing errors on your behalf. While this can save you time, it’s important to research the company thoroughly before hiring them. Avoid companies that promise overnight results or charge upfront fees—these are red flags for scams. In many cases, you can take the same steps they do at no cost.

Maintaining a Healthy Credit Score

Once you’ve taken steps to repair your credit, maintaining a good credit score requires diligence:

Monitor your credit report regularly for any new inaccuracies or fraudulent activity.
Keep your credit card balances low and aim to use less than 30% of your available credit.
Pay bills on time, every time.

Final Thoughts

Credit repair takes time, effort, and patience, but it is worth it in the long run. By disputing inaccuracies, paying down debt, and using credit responsibly, you can improve your credit score and open doors to better financial opportunities. For those seeking professional help, Lexington Law can be a valuable partner in navigating the complexities of credit repair. Remember, the journey to better credit is a marathon, not a sprint, so stay consistent and committed to improving your financial health.