Credit Restoration: How to Fix Your Credit

Credit is an essential part of your life whenever you need financing for important things like loans, cars, and houses. Therefore, every American should understand what credit restoration is and how it works. 

What is Credit Restoration?

Credit restoration or credit repair is the process of improving your overall credit score by removing your poor credit history. Restoring credit works by disputing verifiable facts in your credit report that negatively affect your score and interest rates when you borrow money. While this only works if someone develops the proper credit habits and pays constant attention to their credit files, IDStrong and other similar services can help by guiding you throughout the process.

How it Works

Credit restoration works best if you work with a company that specializes in fixing credit reports. Some of the services included in credit repair are credit monitoring, dark web monitoring, credit dispute assistance, identity theft prevention, and lost wallet restoration. The process begins with reviewing your credit report and debt validation.

Your Rights Under the Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) gives consumers the legal right to challenge credit reporting agencies (CRAs), debt collection agencies, and creditors regarding outdated, inaccurate, or unverifiable data from personal credit reports. Agencies have 30 days to investigate and ascertain claims. They are obligated to either confirm or reject the disputed marks until further confirmations. Incorrect or obsolete accounts must be forwarded in an investigation report to the consumer and deleted from the credit report. 

Typical Credit Report Errors

The most common errors on credit reports include the wrong address, misspelled names, credit accounts that are not yours, and accounts reported in arrears that are current. Another big issue with credit reports is missed payments that were made on time. It's essential to check your credit report and fix any errors you see.

What Does Credit Restoration Include?

Credit repair services include the following: 

Credit Report Monitoring

Ongoing credit monitoring refers to keeping a watchful eye on your credit score and reports, ensuring they don't contain any incorrect information. Users can opt to receive alerts in case of fraudulent credit changes, suspicious activities (on home loans, student loans, tax liens, charge-offs, etc.), identity theft, or any other suspicious activity.

Credit Dispute

If you believe your credit report is not entirely accurate or up to date, you can directly dispute errors or negative marks with the credit bureaus. The agency must complete an investigation by law and verify data accuracy with data providers (lenders, courts, etc.) in less than a month.

Credit Score Boost

Given the fact that 25% of credit reports have errors, you can easily improve your score by reviewing your credit report (you have access to one free credit report per year from each of the three major credit agencies: Equifax, TransUnion, Experian) and paying attention to common mistakes like misspellings, wrong address, incorrect public records, accounts that are duplicated, missing, or don't belong to you.

Positive Payment History

Payment history makes up 35% of your score; therefore, building a positive one is essential to a good credit score. To maintain it and remove late payments from credit reports, keep healthy credit card balances, pay bills on time, and strive to gradually repay all your debts as soon as possible.

Mortgage Correction

A foreclosure can reduce your credit score by 160 points. Therefore, reporting and fixing incorrectly reported loans or short sales can make a huge difference. Double-check your personal information to identify incorrect addresses, mistaken accounts, and timely payments that have been mistakenly reported late.

Identity Theft

If you've been a victim of identity theft, you could restore your good credit in a few steps: report it to the credit reporting agencies and freeze your credit, alert the lenders, close damaged loans/cards, file a report with the police and the Federal Trade Commission (visit the IdentityTheft.gov page), and dispute deceitful charges.

What Credit Restoration Can't Do

Credit restoration services cannot do anything for you that you can't do yourself. Learning how to repair your credit is good but won't help you if you have legitimate negative information on your credit reports like missed or late payments, foreclosures, or bankruptcy. 

How to "Fix" Your Credit by Yourself

If you want to learn how to fix your credit yourself, review the tips below.

Check Your Credit Score & Report

It's essential to know how to fix your credit score if you have bad credit. If you have a low credit score, you may not be approved for loans, credit cards, and a mortgage. The first step to fixing your credit is to get a copy of your credit reports and see where you stand; you are entitled to a free copy with all three credit bureaus each year. Visit annualcreditreport.com to order yours. 

Fix or Dispute Any Errors

The next most important step is to dispute any errors or inaccurate information on your report. If you see accounts that aren't yours, or someone else's information, you must fight it with the credit bureau. These things can drastically affect your score and ability to get financed.

Improve Your Payment History & Always Pay Your Bills on Time

Always pay your bills on time. On-time payments make up a good part of your credit score. Late payments will hurt you. Regardless of where you are starting, make all future payments on time, and the negative information will quickly fade into the background. 

Keep Your Credit Utilization Ratio Below 30%

Only use 30% of your allowable credit. For example, if you have a credit card with a $3,000 limit, only keep a balance of $900 or less. When you are overextended and use too much of your credit, lenders see that as more of a risk, and the credit agencies will lower your score.

Protect Yourself from Financial Scams

Nothing can hurt your credit quite like identity theft. Educate yourself on financial scams and protect yourself and your credit file. You may even consider putting a credit freeze on your credit report so no one can open new accounts in your name.

Can You Pay a Company to Fix Your Credit?

You can pay a credit restoration company to fix your credit, but you must understand it won't happen overnight. Fixing credit takes time and effort. You must pay all your bills on time and work with the credit bureaus to remove errors. Negative items will expire over time. No one can remove them for you unless they don't belong to you.

How Long Does It Take to Repair Your Credit?

Fixing credit is a process, and there is no firm timeframe. In some cases, you could repair your credit in as little as a few months. In other cases, it could take years of hard work. It depends on the situation and how bad the information is. If you suffered a bankruptcy or foreclosure, they could stay on your credit report for 7-10 years.

Regardless of how long it takes to repair your credit, it is worth trying. During the credit restoration process and once you have reached your goals, continue to monitor your credit report closely and watch for any signs of identity theft or erroneous information that does not belong to you. Credit monitoring can protect you now and into the future.

Credit Restoration FAQs

How Fast Can You Repair Your Credit?

Although there aren’t any quick, overnight score fixes, even if you have a low score, using less of your available credit on cards and paying bills on time can improve your credit in 30 days. If you aim to raise your score by 200 points, it could take longer (six months and a few years). An alternative would be to hire a credit counselor, credit tracking, or credit building service, and in this case, a 200-point boost could happen after a few months of expert monitoring.

Can You Build Your Credit Back Up?

Even if serious negative marks such as a foreclosure, collection accounts, or bankruptcy stay on your record for seven years, it’s not impossible to rebuild a positive credit history since their impact fades with time. The secret is to start making positive changes and establish excellent financial habits. In this case, the transition from a low credit score of around 500 can reach a higher tier in 12 to 18 months of responsible credit behavior.

How Can I Wipe My Credit Clean?

If you want to get your credit wiped clean, the best strategy is to contact the original creditors or their debt collectors and convince them to agree with the deletion. It is completely legal under the FCRA to even negotiate specific arrangements or pay to have items wiped. You may also want to invest in credit counseling with a reputable credit repair company.

What is a 609 letter?

A 609 Dispute Letter, often regarded as a hidden credit repair secret, is a method of requesting credit reporting agencies to delete negative information from your credit report in compliance with the legal terms outlined in section 609 of the Fair Credit Reporting Act.