Credit scores are fragile things, and it’s surprisingly easy to damage them. Those of us who have experienced bad credit know how difficult it can make our lives. Fortunately, it doesn’t take as long as we think to repair our scores when we know how to rebuild credit.
What Affects My Credit Score?
Before we can learn how to improve our credit, we need to know the factors that influence our rating.
It is important to note, however, that there are different methods used to determine a credit score. Fortunately, there are similarities, which makes building up good credit easier.
Typically, credit is determined through:
- The different kinds of accounts we have
- Our payment histories
- The number of our accounts
- Available credit versus used credit
- How long our credit histories go back
Of the list, our payment histories are probably the most important. Lenders and credit institutions want to ensure that we will pay them back in a timely manner when they loan us money. Our histories reflect how on top of our payments we have been and whether or not we have a record of being late or skipping them.
We also need to pay attention to our credit limits. When we get close to our limits, or worse, exceed them, lenders and financial institutions will immediately see that as a potential danger. They want to be sure that we can pay off any money we owe with relative ease.
First Steps to Fix My Credit
Whether we go through legitimate credit repair companies or try to do the work ourselves, the first step to repairing our credit scores is to know what our credit reports read.
Once we know what is on our reports, we can take the first steps to clean up our credit scores. Often, the next step is to dispute anything we think is inaccurate or is the result of fraud.
If someone had illegal access to our accounts or stole our card and used it, we can get that removed from our reports. We need to go directly to our credit reporting company, either Equifax, Experian, or TransUnion, and we need to explain the situation.
When we do, we must include any documentation that we have to prove and support our case. It’s also a good idea to ask for return receipts, so we can have an official record that the credit reporting company got our disputes.
It can take months for a dispute to be resolved, and either the credit repair company we have hired or we ourselves will likely have to communicate repeatedly with the company, such as when they ask for more information or clarification before we can settle our cases.
How to Rebuild Credit
There are many reasons we may want to protect our scores, including if we need credit repair for mortgage approval.
The best things we can do to repair our scores are to:
- Pay off any credit debt we have
- Make sure we pay bills on time
- Get a credit-builder loan or use a secured credit card
We likely won’t be able to pay off all of our debts at once. Instead, we need to pay down what we can, when we can. It’s smart to focus on accounts that have the highest interest first, so we pay less over the long haul.
How Long Do Negative Reports Stay on My Credit?
One of the worst parts of trying to repair our credit scores is how long negative marks can stay visible. Even as we learn how to rebuild credit, companies will still be able to see these dings for seven to ten years.
Some of the dings that can last seven years are:
- Missed payments
- Late payments
- Chapter 13 bankruptcy
However, chapter 7 bankruptcy can last up to ten years on your report.
The good news is that all negative information will eventually be wiped from our reports, unlike good information, which can last a lifetime.
Plus, not all late payments are going to mar our scores. We just need to worry about late payments that we received notation for, specifically for payments that were 30, 60, 90, 120, 150, and 180-plus days overdue. Anything else won’t be mentioned.
Having these marks on our credit isn’t the end of us or our financial lives. If we maintain the practices necessary to improve our scores, we will be demonstrating that we are reliable, and our credit will go up.
With that in mind, we can’t let the idea that these dings will appear for seven years stop us from doing all we can to increase our credit scores.
There’s no quick fix for repairing credit history. It takes time and can be a long and involved process. However, the moment we start making positive steps is the moment we begin to get our financial lives back on track.
A good credit score is often vital for many things, including large purchases like a car or house. The better our credit ratings, typically, the lower the interest we have to pay on these purchases.
It’s in our best interests to get our credit back on track. The process doesn’t need to be intimidating. Slow, small steps still move us towards a positive goal.
Angela Kovacs of Van Buren Township, Michigan is the founder and CEO of Credit Repair Gal. A credit restoration firm in Michigan.