A credit file is among one of the most important financial records you have. It is used as a significant factor in most credit decisions, including auto loans, mortgages, personal loans, and, in some cases, employment.

As important as good credit is to have, many people do and will struggle with poor to fair credit in their lives. Fortunately, repairing credit is possible. 

Credit repair is a common need and nothing to make you feel shame. Life happens. The important thing is that you take back control. Thankfully, the repair process does not need to belong and grueling. Depending on the shape of your credit report, it is possible to see significant gains within three to six months. Still, to experience credit gains, you must put in the work. 

Repairing Credit Step 1: Reviewing Your Credit Reports

Before you can begin the work of credit repair, you should gain a thorough understanding of your credit file. The only way to know what you need to fix is to order a credit report from each one of the three major credit bureaus: TransUnion, Equifax, and Experian.  

You are legally permitted one free report per year from each of the three bureaus. To receive your free reports, you can visit AnnualCreditReport.com, the only authorized website per federal law. While these reports will not display a credit score, they will provide an extensive history of your credit. 

Go through each item in each credit report and highlight anything that does not seem accurate. Reviewing your credit reports can be a time-consuming process, but you must verify every debt because errors are relatively common. 

Repairing Credit Step 2: Disputing Errors on the Reports

Did you find any errors in your credit reports? If not, your debts are verified, and the only thing left to do is start paying them down or off. You can and should reach out to each creditor to discuss arrangements. Many creditors are willing to work with borrowers to find suitable payment arrangements or settlements.  

If you cannot afford to pay down your debts, you might consider filing for bankruptcy. However, be aware of the lingering effect of bankruptcy on your credit. Most bankruptcy options will remain on your credit report for up to seven years. 

If you reviewed your reports and found inaccuracies, you need to challenge or dispute them. Each credit bureau has a slightly different approach to the dispute process. 

Equifax

The quickest way to dispute an item on your Equifax report is through its online dispute portal. Before you can access your report, you need to register with the website. The registration process is three steps and should only take a few minutes.  

Once in the system, you must select items to dispute. Before you can file a dispute, you have to provide supporting materials, including: 

• Proof of your identity 
• Credit card statements 
• Canceled checks 
• Utility bill 

Once you have filed your online dispute, Equifax provides a reference number. You can use the reference to check on the status of your dispute.  

If you prefer to send a dispute letter through traditional mail, you can do so by mailing it to Equifax, P.O. Box 740256, Atlanta, Ga 303740256. Equifax requires the dispute letter to include several items, including: 

• Name and Social Security number
• Birthday 
• Item and reason for dispute 
• Equifax report confirmation number 

Experian

Filing disputes can speed up the process of repairing your credit, and like Equifax, Experian tries to make the dispute process easy by providing an online dispute portal for consumers. You again need to register to file any disputes, but like Equifax, registration is a quick and straightforward process.

Once registered, disputing items is as easy as clicking. You need to supply supporting documents, which can be uploaded to the site. 

Depending on the number of items in dispute, it may be easier to send a dispute letter through regular mail with the supporting documents. You can send dispute letters to Experian, P.O. Box 4500, Allen, TX 75013. Beyond supporting documents, you need to include: 

• Name and SSN 
• Birthdate 
• Copies of government-issued I.D. and bank, insurance, and utility statements 
• Your current address 

TransUnion

TransUnion’s online dispute portal also requires registration to use, but the actual dispute process can be a little more straightforward. Once inside, your credit report is itemized and next to each item is a button with the words “request dispute.” Clicking the button brings up a page where you can upload additional and supporting information to dispute the item. 

However, for those who prefer paper, you can send your disputes to TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA 19016-2000. You need to include several pieces of information in the letter, including: 

• Name and SSN 
• Birthday 
• Corrections to personal information 
• Current address 
• Reason for dispute 
• Disputed item, account number, and company name   

Repairing Credit Step 3: Contacting Credit Repair Services

Depending on your credit report, the number of potential disputes, and your comfort level with your debt, a credit repair service may be helpful. These services essentially do everything you can do on your own, but they allow you to remain one step removed from the process while they bring their expertise to bear. 

Many people do not feel comfortable negotiating with creditors or communicating with the credit bureaus; they may feel intimidated or anxious. Therefore, the prospect of allowing someone else to take the reins is reassuring. 

However, before contacting a credit repair service, know your rights and do your homework. Prior to the Credit Repair Organizations Act of 1996, many repair companies held poor reputations, often overcharging and not helping consumers. Unfortunately, unscrupulous companies still exist, so you need to do your homework if you choose to hire one. 

Signs of a Good Credit Repair Services

While caution is necessary when looking for a credit repair service, there are many upstanding organizations; the key is to know what to look for in a good business. Selecting a service for repairing credit is about more than ensuring they adhere to CROA standards and practices. When choosing a credit repair service, look for companies that: 

• Provide free consultations 
• Obey local laws 
• Offer performance warranties 
• Have a reputation and track record 
• Explain all options 

Often, the longevity of a company and the openness of options and consultations are enough to show genuine care for the work and the consumer. However, as the consumer, you must always be cautious, especially when such services can cost between $50 and $130 per month or more. 

Signs of Caution

While you might feel desperate to find help to repair your credit, remember that situations are never so dire that you cannot spend a few hours doing proper research. When looking for a credit repair service, you should be cautious of a few marketing tactics or operational faux pas, such as: 

• Offers no contract 
• Guarantees of raised scores or fixed disputes 
• Demands for upfront payment 
• Promotes “quick and simple” fixes 
• Suggests you lie 
• Tries to create a new credit profile for you

Part of reviewing credit repair services is checking to see if there are any active or past complaints against the company. You can check for complaints in the Consumer Financial Protection Bureau database or reach out to the corporate commission and attorney general’s offices in your state or the state the company is headquartered. Additionally, you can check consumer reviews online. 

Repairing Credit Step 4: Understanding the Resolution Timeline

It is challenging to give a specific timeline for repairing credit because each person’s report varies. One individual might only have a few minor discrepancies to dispute and repair, taking only a few months. In contrast, others might have several disputes and legitimate debts to resolve, taking anywhere from six months to a year or more. 

On average, credit repair takes three to six months. However, the timeline also varies depending on whether you are doing the repair work alone or with a service. Many people who focus on DIY repair tend to focus on only a few items at a time, which can prolong the process.

Repair services tend to focus on all things at once, trying to resolve issues as quickly as possible. 

Repairing Credit Step 5: Rebuilding Your Credit

Rebuilding credit is often more challenging than building it from scratch. You need to demonstrate your trustworthiness and creditworthiness despite past mistakes. Before you begin the journey of rebuilding, you must check your current credit score.

Many people believe their scores are worse than they are, so take the time to review your score through one of the many free resources available. 

While there is nothing to be done about legitimate debts, you do have options to improve your credit and can even do so somewhat quickly. There are six fundamental strategies for re-establishing your credit. 

1. On-Time Payments

It is best to get off on the right foot by starting making on-time payments and catching up with late obligations. While you might not be able to make large payments to catch up immediately, you may be able to negotiate with creditors to push past due payments, making your account still listed as current. Late payments can stay on a credit report for a minimum of seven years.  

While it is often tempting to focus on bills that have gone to collections, it is best to focus on debts and accounts that are still active or open. Despite the noise and aggravation collectors cause, they are not your priority when trying to rebuild your credit. 

2. Credit Utilization

While repairing your credit, you might have paid down or off one or more of your credit cards. To maintain or improve your credit score, you should keep your credit utilization under 30%. Credit utilization is just a fancy way of saying the percentage of credit limit used.

Therefore, if you have one credit card with a $500 limit, you do not want to use more than $150 at a time. Additionally, it can be beneficial to pay off credit balances every month. 

3. Secured Credit Cards

Depending on your credit score and history, you might not get approval for a traditional credit card. While the lack of a credit card is not always bad, these products serve a purpose when rebuilding credit.

A secured credit card provides a way for consumers to rebuild credit with minimal risks. A secure card requires a deposit upfront, which acts as your credit limit. You want to find a card that reports to all three credit bureaus. 

4. Credit-Builder Loans

Credit-builder or secured loans are like secured credit cards and are excellent low-risk tools for repairing credit. A bank, typically a credit union or community bank, places the value of the loan in a locked savings account. You make payments on the loan. When you pay the loan off, you get the funds. The bank reports all on-time payments to the credit bureaus. 

5. Authorized User

A quick approach to rebuilding credit is through authorized user accounts. If you have a willing family member or friend with an available credit card account in good standing, they can put you on their account as an authorized user.

Make sure the account has a positive payment history. You will also get credit for the account history as an authorized user, including on-time payments.  

6. Co-Signer

A personal loan is an excellent way to rebuild credit, but your existing credit might make approval challenges. You can ask a family member or friend to cosign the loan, but both of you should understand the risk for the co-signer. If you fail to repay the loan, they are putting themselves on the line. Using a co-signer should be a last resort and only used when absolutely necessary. 

Start Repairing Credit Now

Many people have or will have experience repairing credit. It is common to have credit challenges throughout life, but repair is made easier through proper debt management. If you or someone you know is struggling with debt, consider the options. Check out Fiscal Tiger to learn more about debt management, credit repair, and credit reporting. 

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