You are watching your favorite show on T.V. and see a commercial that peaks your interest. “Do you have credit problems?” You think, “Why yes, I do!” The commercial continues, “No problem! We can erase your bad credit history forever and you can start all over!” How convenient does that sound! Of course there is a small fee associated with this magic credit eraser. You think to yourself the fee is worth having good credit again.
I am here to break the sad truth; this is a very popular credit repair scam. No one has the power to just create new credit identities. If you have poor credit history, then only time and your effort are the only things to rebuild your credit.
Evaluate Your Current Situation
Federal law allows consumers to receive one free copy of their credit report from each credit bureau per year. Checking your credit report regularly can allow you to check for inaccuracies and fraudulent accounts. You can either view all three of your reports at the same time once per year or pull a report from a different bureau every few months. Either way, viewing your credit report shows where you stand with your accounts.
Make Payments On Time
One of the simplest steps to rebuilding your credit is to make your payments on time! Making timely payments accounts for about 35% of your credit score. This shows lenders that you are responsible with your obligations. If you are behind on an account, work on a plan to become current on payments or seek counseling to assist you with this. Need help remembering to pay? Enroll in automatic payments so the money is taken from your account each month. Many banks also offer payment reminders through their bill payment systems that will email your or text you a reminder alert. Another option is to set up a reminder in your email or phone calendar to send out your payment.
Mind Your Debt
Sometimes this is easier said than done. Paying down (I was going to link to the “paying down debt” blog that I just did) outstanding debts will help your score over time. Simply moving debt from one credit card to another is not the same idea. The goal is to try to keep amounts owed on your credit cards low and to not open any new credit accounts that you do not need.
You stopped using your credit cards so you can pay down your debts and you have begun to make your existing accounts current. Is there anything else you can do? If you have the resources to do so, opening a secured line of credit or secured credit card with your bank or credit union is another option. Essentially you are borrowing against your own money at a low interest rate and paying yourself back with monthly payments. Provided you make the payments on time and stay within your limits, this will help build positive history on your report.
The Bottom Line
So how long will all this fixing take? The answer depends on the reason why your credit history is bruised. Delinquent accounts can remain on your credit report for seven years. Bankruptcy can remain on your account for seven to ten years, along with most public records items. Remember, simply closing an account does not remove it from your credit report. Good or bad, that closed account will factor into your score.
Rebuilding your credit is hard work. Being responsible with your current credit accounts and opening new accounts only as needed are key factors to rebuilding your credit history. There is no magic credit fairy that can wipe away the past and let you start all over.