Credit Score Improving Your Score

Your Brain is Your Cheapest Tool for Credit Repair

Written by Eric Rosenberg

When you get into trouble with credit, it’s easy to throw your hands up in frustration and ignore the problem. But like most problems in life, your credit won’t improve when you ignore it. Some people choose to hire a credit repair company to fix their problems, but in many cases this ends up as a bad deal.

Rather than throwing money at a company that may not have your best interest in mind, you can take the approach of fixing your credit yourself. And, odds are, you will have a better result when you take care of it yourself compared to hiring a credit repair company. Let’s take a look at why and what steps you can take to fix your credit on your own.

Anything a “Credit Repair” Agency Can Do, So Can You

When you call up a credit repair agency for help, they have a typical set of processes and procedures designed to lower your debt and eventually improve your credit. However, many of the strategies used may take you one step forward and two steps back.

For example, one tactic used by credit repair companies is to call up lenders and ask for partial debt forgiveness. In this type of settlement, the borrower agrees to pay a portion of their outstanding debt and the remainder is discharged. The problem with this strategy is that while it lowers your debt and puts you on track for improved credit, the discharge sits as a derogatory mark on your credit for years.

While you may see your credit score improve from lowering your outstanding credit, you would also fall victim to the long-term downsides of derogatory marks on your credit. This mixed result is common in the credit repair industry, and one reason so many credit repair companies are looked at as untrustworthy. The CFPB has extensive resources on identifying scams in the credit repair industry, which is a testament to how rampant the problem is.

Get Your Income, Expenses, and Budget Under Control

Rather than paying someone else to handle your credit problems, it is best for the person who cares most and has the best knowledge on the state of your credit to handle the situation. That person is you.

Most credit problems stem from larger personal finance issues, so that is the place to start your credit repair project. Look at your income, expenses, and your budget to find the source of money stresses.

While it’s easier said than done, almost everything in personal finance comes down to one main rule: spend less than you earn. If you are living without a budget and don’t know where your money goes, step one is putting a budget in place. Once that happens, you can start working on a plan to paid off your debt.

Resolve Outstanding Issues on Your Credit Report

Now that your finances are in order, it’s time to look at your credit report. The three major credit bureaus are required to give you a copy of your credit report annually by law. The official website to get your free government mandated credit report is You can get your credit report and/or credit score for free from a handful of websites, but is the only official site to get your credit report for free directly from the credit bureaus.

Review your credit report and focus on every little detail. If you find something incorrect, take note and continue until you have reviewed all three credit reports. The three credit bureaus source their data differently, so it is possible they won’t match.

The Federal Trade Commission conducted a survey that found that roughly 20 percent of consumers have an error on their credit report. If you go out for drinks with four friends, odds are one of you has at least one error on your credit report. That may very well be you!

If you do find negative, incorrect information on your credit report, you have the right to have it removed. Each credit bureau has a dispute process to remove inaccurate negative information. Follow through on every error until they are all resolved. In 2008 I found a couple of errors on my own credit report and was easily able to get them resolved by reporting the errors online.

Pay Down Your Debts

If you can get into a routine of paying down debt, you are already on track to improve your credit score. One of the biggest factors in your credit score is your total outstanding debt compared to available credit. If you can lower your outstanding debt, your score will instantly improve. Stay at it until all credit cards are paid off, then move on to the car loans, student loans, and other debt.

If you have any credit lines with late or missed payments, it takes seven years for them to drop off of your credit report. While paying your debt down, make sure to make 100 percent on-time payments on every credit card and loan. Combining these two strategies is the best method to improve your credit over time.

Run Your Credit Like a Boss

Many people feel that their personal finances are holding them back from doing what they want in life. Flip that perspective and take ownership of your personal finances and credit. Use them as a tool to live the life you want, don’t blame them for holding you back. No one has more power over your credit than you.

Think hard every time you apply for a new credit card or loan, as inquiries can lower your credit score. Get into a pattern of making regular payments to get out of debt. I find that splitting my payments and paying every payday is much easier than making monthly payments in a big lump. Whatever method of budgeting and managing your money that you find works best for you is the one you should stick with.

It may not happen instantly, but if you stick with this tried and true strategy, your credit score will only improve over time. Take it from a member of the 800+ credit score club: If I can do it, you can do it. The only thing holding you back is yourself. Now it’s time to get to work fixing your credit. And you don’t have to pay anyone a dime to make it happen.

About the author

Eric Rosenberg

Eric Rosenberg is a finance, travel, and technology writer originally from Denver, Colorado living in Ventura, California. When away from the keyboard, Eric he enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and baby girl. You can connect with him at his own finance blog Personal Profitability.


Leave a Comment