Top Credit Repair “Secrets” (Pssh, They’re Easy)

A bad credit score will affect your lifestyle.  Severely.  You’re either forced to take out loans at very high interest rates or, sometimes, not at all. In some cases, you may lose an employment opportunity due to a poor credit. If the items listed in your credit report are real, you know that you have to deal with them. What happens if you have items in your credit report that are not accurate?

A surprisingly large percentage of the population have worse credit than they should due to inaccurate information.  For example, you may have paid off a credit card a few years ago, but your credit card company did not report it to the credit agencies. This happens to many people and unfortunately negatively affects their credit history.  This doesn’t have to be the case, however, as you have the right to challenge inaccurate information on your credit report and have it removed. The problem is that you have to be proactive and know how to go about fixing your bad credit.

Assuming the information on your credit report is accurate, there is unfortunately no quick fix. Many credit repair specialists would have you believe repairing your credit is a difficult, complicated process; however, there are a few easy “credit repair secrets” you can use to do it yourself:

Learn How Credit Scores Are Formulated

The specifics of exactly how your Fico score (I recommend getting your Fico Scores/Reports directly from myFico.com) is calculated is a closely-guarded corporate secret.  Fortunately, we don’t need to know the details to act.  It comes down to two things:  your payment history and your credit utilization ratios.

That payment history negatively affects your credit is a no-brainer.  If you don’t pay your bills on time, your credit will suffer.  The solution to this problem is, surprise, to start paying your bills on time.  I know, I know.  Money is tight.  But consistently paying at least the minimum on all your debts every month will do more to improve your credit than the next 20 credit repair secrets combined.  There are no short-cuts here.

Less intuitive is the impact credit utilization ratios have on your credit score.  Your credit utilization ratio is simply the total amount of all your outstanding loans divided by the total amount of credit available to you (example:  how much credit card debt you carry relative to your credit limits).  This may seem strange at first.  After all, why should lenders care how much money you’ve borrowed as long as you’re paying everything on time every month?  The answer is simple: the more money you borrow, the more likely it is that you won’t be able to juggle all your bills should you lose your job, suffer a serious illness, etc.  As a general rule, try to keep your credit utilization ratio below 20% at the most and below 10% if you can help it.

I know, I know.  There is no killer credit repair secret here.  But that’s just it:  there is no silver bullet, despite what those late-night commercials would have you believe.