Is Credit Repair Attainable for the Average Person?

The last few years have served as something of a wakeup call for millions of Americans who may have been mishandling their credit and finances in the past; with the significant importance that lenders and other companies place on a person’s credit standing, doing all in your power to make sure yours is as good as it possibly can be is of the utmost importance. The problem for many, though, is that the damage they’ve done in the past can be considerable.

A large number of people across the country are now in need of credit repair, though this is obviously to varying degrees. While a relatively small number of people, who have mostly exhibited judicious financial behavior in the past and likely could not hope to improve their scores much through extensive efforts to get their debts under control and adopting other common good credit habits, will generally not benefit from a standard credit fix, most people will. As a consequence, there are a number of steps you should take to find out exactly where you stand. Doing so, in turn, will allow you to figure out exactly how much work you need to do, and also help you determine the best plan for attacking your credit-related mistakes of the past.

Where to begin

The simplest place to start is to order copies of your credit reports from at least one of the three major reporting bureaus (Experian, Equifax and TransUnion) and look them over closely. These documents will give you an overview of all the accounts currently listed in your name, as well as certain details about them such as the payment history for them and how much more you owe on each. That kind of information can really help to inform your decisions about what you need to do to get your credit back on track.

For example, if you see that you’ve made something of a habit of missing deadlines and therefore have a bit of a battered payment history, doing all you can to smooth those problems over by making several months or more of on-time contributions to every single one of your accounts can go a long way toward repairing your standing because payment history alone makes up 35 percent of your scores.

Likewise, if you see that you owe your various lenders a large amount of money, it might be wise to start looking for ways to pay them down as quickly as possible. The second-largest portion of your score — totaling another 30 percent — is made up of the amount of money you owe versus your total credit limits, when viewed as a percentage. Coincidentally, if your debts exceed 30 percent of your limits (for example, if you owed $3,500 on limits totaling $10,000 across several cards), your score will start to deteriorate commensurately.

These two pieces of data alone will probably allow you to really begin cutting into the damage caused by your bad credit habits and potentially return you to a significantly improved standing.

What if there are other problems?

Of course, not all credit issues are brought on entirely by mistakes you’ve made yourself. In a certain number of cases — which some studies have shown it be quite high, proportionally — you might find that you have an account you don’t recognize, or other potentially unfair entries, marring your standing unfairly. In these cases, you will have to contact both the lender making these claims and the credit reporting bureau that issued the documents to try to get them cleared up. This will typically mean sending both parties a written statement explaining the problem, as well as providing what evidence you can find to support your claims that the entries have been listed in error.

However, it’s not always easy to get these problems cleared up even if you think your evidence is relatively irrefutable. For this reason, many Americans may end up having to turn to a credit repair company to potentially help them remediate the issue. These organizations typically have a lot of experience in dealing with the problems that might be having an undue and adverse effect on borrowers’ standings, and therefore may be able to do the same for you when these issues present themselves.

The benefit of getting them sorted out are likewise important: when you have good credit overall, you will likely be able to qualify for far more types of financing than you would have in the past. Moreover, as your credit score improves overall, that will usually also grant you access to the best possible terms available on the accounts for which you are applying. That means more affordable accounts overall, and thus you may be able to save large amounts of money over the course of the year.

Posted in Credit Repair
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