Fixing Your Credit: The Do-It-Yourself Approach
May 28th, 2009, Written By: Kerri Randall
You’ve hit a financial slump and realize it’s time to improve your credit history and score. If you do a simple online search, you’ll find a multitude of websites offering help. Some of these sites are credit repair services, and others offer do-it-yourself advice. You might be lured in by the apparent convenience of handing your credit problem off to someone else to fix, but it could end up costing you more in the end.
Credit repair companies cannot legally do anything more than you can do on your own, so really you’re just paying someone else to do something you can do completely for free. In fact, it’s highly likely that any of these companies that you look into are scams anyway, and you’ll end up paying hundreds or thousands of dollars with no results. The Federal Trade Commission has yet to see a legitimate credit repair company, and a search on their website for credit repair companies will only bring up articles regarding cases against them, usually resulting in the companies having to pay damages to the defendants. (And you’ll see the word “deceptive” used in almost every article. Not a good sign.)
As always, your first step is to obtain your free credit report from each of the three credit bureaus and review it. Make sure it is free of errors, especially large ones that will dent your score. If there are errors, take steps to remove them immediately.
Stop using your credit cards, especially for non-emergency purchases, and start paying them down. A lower balance is always better for your score, so start a plan to budget your finances and pay down your balances. Open a savings account and use the money you put into it solely for paying down your debt.
Be sure to stay on time with all of your payments, too, and avoid opening new accounts when you’re trying to improve your score. Too many inquiries reflect negatively on your report.
Beyond these tips that you can apply immediately, your only other step is patience. The FTC says that “only time, a conscious effort, and a personal debt repayment plan can improve your credit report.” Establish good credit habits now and keep up on them to improve your score and maintain it.
Categories: Establish and Rebuild Credit
