The Ultimate Guide To DIY Credit Repair

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Credit scores have an almost mystical power in modern life—a number that can make or break your ability to finance a car, buy a home, or even get a job.

That mystery (and fear of the unknown) is what leads many people with less-than-ideal credit scores to put off the important work of credit repair. According to recent data, only 33% of US adults even looked at their credit scores last year due to fear of what they might find.

But credit repair doesn’t have to be a daunting task, and you don’t need to hire a professional (or spend a lot of money) to get started. In fact, with a little know-how and elbow grease, you can do it yourself.

This guide will show you how to repair your credit on your own, step-by-step. We’ll also dispel some common myths about credit repair and give you the tools and resources you need to get started.

What Is DIY Credit Repair?

DIY credit repair is the process of taking targeted action to improve your credit score without the help of a credit professional.

Generally speaking, this process usually involves two key steps:

  1. Identifying the factors that are negatively impacting your credit score.
  2. Taking action to eliminate or improve those factors.

Both of these steps can be done without the help of a professional, although you’ll need to have a solid understanding of how your credit score is calculated and adjusted. Don’t worry, though—we’re here to help!

Now, let’s take a more in-depth look into the credit repair process. We’ve broken it into six easy steps. Just follow these simple instructions, and you’ll be on your way to a better credit score in no time!

1. Understand the Basics of Credit

Credit scores can be confusing—there’s no denying it. That’s why you should start by taking some time to learn about how credit scores work. This will give you a better understanding of the factors that are impacting your score, and what you can do to improve it.

Below, you’ll see a list of the five factors used to calculate your credit score (along with their weight in the equation):

  1. Payment History (35%): This is a record of whether you’ve made your payments on time. Late or missed payments will hurt your score, while a solid history of on-time payments will improve it.
  2. Credit Utilization (30%): This measures the amount of debt you have compared to the amount of credit available to you. It’s best to keep your credit utilization below 30%, although lower is always better.
  3. Credit History (15%): This is a record of how long you’ve been borrowing money. A longer credit history will improve your score, while a shorter (or non-existent) history will hurt it.
  4. Credit Mix (10%): This measures the variety of credit products you have, including installment loans, revolving lines of credit, and so on. A mix of different types of credit will improve your score, while a lack of diversity will hurt it.
  5. New Credit (10%): This measures how often you’ve applied for new credit products. Too many applications in a short period of time will hurt your score, while a more moderate pace will improve it.

Understanding these factors is the first step in credit repair, as it will give you a better idea of what areas you need to focus on.

2. Get a Copy of Your Credit Report

Next, you’ll want to get a copy of your credit report from all three of the major credit reporting bureaus:

  • Experian
  • TransUnion
  • Equifax

Under the Fair Credit Reporting Act, you’re entitled to one free copy of your credit report from each bureau every year. To request it, head over to Annual Credit Report and make a free account.

Alternatively, you can make a free account with any of the individual credit bureaus directly, but you’ll only get one report from each instead of all three at once. This is no good because some creditors only report to one or two bureaus rather than all three, meaning you could be missing important information.

Another option is to use Credit Sesame, which lets you get a comprehensive overview of your overall credit situation and provides some insight on how to improve it.

3. Look for Errors

Now that you have your credit reports in hand, it’s time to start looking for errors. Remember, even a small mistake can have a big impact on your credit score, so it’s important to be thorough.

When looking for errors, keep an eye out for errors in any of the following categories:

  • Personal Information: This includes your name, address, Social Security number, and date of birth.
  • Account Information: This includes the type of account, your account number, the credit limit or loan amount, and the payment history.
  • Public Record Information: This includes bankruptcies, foreclosures, and liens.
  • Inquiries: This is a record of who has accessed your credit report and how many times.

If you spot any errors, reach out to the credit bureau in question and dispute them. You can do this online, via mail, or via phone call—and it’s usually a fairly simple process.

For Experian Credit Report Errors

  • Online: Experian online dispute form.
  • Mail: Experian National Consumer Assistance Center, P.O. Box 4500, Allen, TX 75013
  • Phone: 866-200-6020

For TransUnion Credit Report Errors

  • Online: TransUnion dispute online.
  • Mail: TransUnion LLC, Consumer Dispute Center, P.O. Box 2000, Chester, PA 19016.
  • Phone: 800-916-8800.

For Equifax Credit Report Errors

4. Start Establishing a Credit History

As you may have noticed, one of the key factors in your credit score is your credit history—specifically, how long you’ve been borrowing money.

If you don’t have much of a credit history, or if it’s damaged, one of the best things you can do is start establishing (or re-establishing) a good credit history as soon as possible. There are a few different ways to do this:

Apply for a Secured Credit Card

A secured credit card is a type of credit card that requires you to put down a security deposit, which serves as your credit limit. For example, if you put down a $200 deposit, your credit limit will be $200.

This may seem like a strange way to build credit, but it actually works quite well. Secured credit cards are reported to the credit bureaus in the same way as regular credit cards, but they don’t come with the same risks.

Take Out a Credit Builder Loan

Another option is to take out a credit builder loan from a credit union or online lender. These are small, personal loans that are specifically designed to help you build credit.

With a credit builder loan, the lender puts the loan amount into a savings account in your name.

You make zero-interest payments on the loan, which go toward both the loan balance. Once you’ve paid off the loan, you get the money in the savings account, minus any fees.

Here are a few great credit-building loan providers to get you started:

Become an Authorized User on Someone’s Account

If you have a family member, partner, or (very) close friend with good credit, you may be able to become an authorized user on their account. This means you’ll get your own card linked to their account, but you won’t be legally responsible for the debt.

As an authorized user, you’ll benefit from their good credit history, which can help to boost your own score. Just make sure the account is in good standing before you agree to anything—you don’t want to end up getting stuck with someone else’s bad debt.

5. Look Into Debt Consolidation

If you have a lot of debt, consolidating it into a single loan can be a great way to save money and simplify your monthly payments. Debt consolidation loans can also help to improve your credit score by lowering your credit utilization ratio.

To qualify for a debt consolidation loan, you’ll need a credit score of at least 560—any lower, and you’ll be entering loan shark territory. Don’t worry if you’re not there yet, though. You can always work to improve your credit score and then apply for a loan once you’re ready.

Here are a few low-credit debt consolidation loan providers to look into:

  • Upgrade (score of 560 min.)
  • Earnest (score of 650 min.)
  • Universal Credit (score of 560 min.)
  • LendingClub (score of 600 min.)

6. Improve Your Financial Habits

DIY credit repair is a marathon—so you’ll need to be in it for the long haul. That means making some changes to your financial habits, so you can avoid damaging your credit in the future.

Here are a few key habits to focus on:

  • Pay your bills on time. This is a big one—payments that are 30 days or more late can stay on your credit report for up to seven years. If you are going to miss a payment, reach out to your creditor as soon as possible to see if you can work out a payment plan that won’t impact your credit.
  • Don’t close old accounts. Even if you’re not using an account, keeping it open can help to improve your credit score. Closing an account will mess with your credit history and lower your credit limit.
  • Keep your credit card balances low. Your credit utilization ratio—the amount of debt you’re carrying compared to your credit limits—shouldn’t exceed 30%.
  • Ask for a credit limit increase. If you have a good history with your credit card issuer, you may be able to get a higher credit limit. This will lower your credit utilization ratio, which can help to improve your credit score.
  • Only apply for new credit when you need it. Every time you apply for a new line of credit, it shows up as a hard inquiry on your report, which can ding your score.
  • Monitor your credit report regularly. You’re entitled to one free copy of your report from each of the three major bureaus every year. Check them for errors and dispute any that you find.

By following these simple tips, you can keep your credit in good shape—and avoid the need for future credit repair.

Also, check out how to raise your credit almost overnight.

DIY Credit Repair Doesn’t Need To Be Scary

Just because the process of credit repair can seem daunting doesn’t mean it has to be. By following the tips in this guide, you can take control of your credit—and improve your financial future in the process.

Take your time, focus on one task at a time, and most importantly, don’t be afraid to ask for help when you need it. Remember: DIY credit repair is a marathon, not a sprint!

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