How to Repair Credit: A Way to Repair Credit That Works

Credit Repair  Debt Management  

There are some people with bad credit who speculate whether or not is it actually necessary to attempt to improve their low credit score. The answer is a definite yes! Financial responsibility is not always easy. Yet in today’s world, having the best credit score possible can help life go more smoothly in a variety of ways.


At some point in life most adults find the need to apply for credit such as general loans, mortgage loans, or credit cards. Credit scores are also taken into consideration if applying to lease an apartment, or for auto loans; potential employers routinely run credit and background checks before hiring. There is almost no escape from the need to finance, for whatever reason. But what does this have to do with repairing damaged credit?


For one thing, individuals with low credit scores are charged much higher interest and fees that add up to tons of cash over time-that is if the applicant is approved at all.  Embarrassment, low self-esteem, and anxiety often go hand in hand with being declined credit or bill collector harassment. Even more importantly, few people escape the life emergencies which cannot be covered by what’s in their bank account. Emergency loans are available to help ease the situation.


In a large number of cases, poor credit is a result of misfortune through no fault of the borrower. But the consequences are the same. Simply put, putting in the effort to improve credit is far more gratifying than the costs and headaches of leaving damaged credit unchallenged. Or even worse, making choices which cause credit scores to sink into the depths of financial despair.


Still, there is a way to repair credit that really works. Here’s how:

  1. Bad News First-Credit Repair Scams
  2. Good News! Consumers Can Help Repair Their Own Credit
  3. Help is on the Way: Credit Counseling


Bad News First-Credit Report Scams

Everyone would like to have better credit scores, even people with good credit. As an answer to this demand, an Internet search for “how to repair credit”, “credit repair”, or the like will return millions of credit repair companies. However, the consensus in the financial sector is that when it comes to credit repair companies, there is no such thing as being too cautious.


There is an abundance of news stories detailing how tens of millions of people in the U.S. alone are scammed by companies that offer fast credit repair to consumers seeking to clean up their credit record. According to several sources, credit repair scams are among the most frequent, along with prize promotions, business opportunities and weight loss products (although these scams actually do help consumers lose weight-in the form of hard earned cash).


This does not mean that it is impossible to get outside help to repair credit. Although risky, some consumers insist upon trying to seek help by this means in a sincere effort at credit repair.


For those who do, there are definite red flags to look for:

  1. The company promises to remove accurate and current information from the credit report. This cannot be done (legally) anywhere on the planet. However, consumers can take steps on their own (for free) to remove inaccurate or old information from their credit file (more on this later).
  2. Payment is required with a guarantee for success before service is provided.
  3. Claims are made to deliver a new credit history, identity, or fresh start with credit. This tactic usually involves supplying stolen Social Security numbers for people to use to apply for credit. This is illegal-meaning the consumer will have more than bad credit to worry about when the trap closes.
  4. Another sign of suspicious activity is If the consumer is advised not to contact the credit reporting agency directly.
  5. The company neglects to explain the customer’s rights. All jurisdictions have safeguards in place to protect the rights of its citizens with regard to credit. This includes the right to let them know what services they can do for themselves if they choose to do so, and the right to cancel any contract within a certain timeframe.


Good News! Consumers Can Help Repair Their Own Credit

It is wise to start repairing credit before it is needed if at all possible. Fortunately, consumers can become proactive immediately, at no cost, with attempting to raise their credit score. 


These credit repair self-help guidelines are a start in that direction:

  1. A credit report review from each of the credit bureaus lets individuals a look at their scores, history of payments, amount of debt they owe, as well as other information. Armed with these facts, anyone can begin forging a plan to get back on track. Free credit checks are readily available from online resources. Checking credit reports does not affect credit.
  2. It pays to carefully search each report for errors of any kind (identity, payment history, paid balances still showing as owing, etc. This happens more often than people realize. It is possible to dispute incorrect information through the credit bureau and have it removed for good, often online with simply the click of a button.
  3. Since some factors have a higher negative impact on credit scores, it is a good idea to choose to dispute any errors in those accounts first. Collection accounts and judgements are high on this list and may take longer to remove.
  4. Credit reports also show credit utilization, which means how much credit is in use (balances) in relation to the total of all credit limits. As an example, if the limit on all credit accounts such as credit cards, auto loans, and installation loans totals $10,000 and the borrower has a total balance owed of $5,000, the credit utilization is 50%. Bringing this figure to under 30% is a sure means to raise the credit score.
  5. To lower credit utilization, borrowers can pay off the debt with the highest interest. Next, paying down each debt (newest first) gradually leads to much improved scores.
  6. A good rule of thumb is to always pay more than the minimum balance on credit card accounts. If it is not possible to pay more during a given month, borrowers should never miss at least the minimum payment. Late payments kill credit and stay on the report for years.


Help is on the Way: Credit Counselling

There is no need to travel the credit repair journey alone. Assistance is available with reputable credit counselling. The counsellors in these organization have been trained and certified in managing money and debt. Unlike credit repair scams, genuine credit counselling helps borrowers create tailor made, systematic financial plans.


In addition, they offer:

  1. Budget advice and assistance
  2. Guidance in organizing debt management plans
  3. Payback and interest rate negotiation with creditors
  4. Free detailed information about their company and the services they offer before contracting


The way to repair credit that works is definitely not a “get fixed quick” scheme. But it is a tried and true method of improving credit over time. The millions of people who have forged ahead to turn around their credit each year start with a firm commitment to do what it takes to make it happen.


When asked, the majority would most likely share that they have taken time to do careful research regarding potential pitfalls. At the same time, they invested sweat equity into the goal of a higher credit rating by working themselves improve their financial situation. Embracing reliable help as needed was definitely in the mix.  Each of these efforts were rewarded with a stronger and more stable financial status and a sense of pride in accomplishment.


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Smarter Loans Staff

The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star in 2019.