According to research, the average American is about $38, 000 in personal debt. Being in debt is painful and hard to get out of once you are behind. With some simple DIY credit repair, you could be out of the debt hole and living your life optimally without the weight holding you down.
The total accumulative debt in the united states as of 2018 is an approximate $3.979 trillion dollars. Personal debt is paralyzing, it stops you from enjoying your life and partaking in the activities that you love.
If you want to shake off that heavy burden of debt, you need to know how to improve your credit score, and paying a company to do it for you isn’t always the best answer.
But how exactly do you know what works and what doesn’t when attempting to DIY credit repair? Keep reading to learn how to fix your credit all by yourself.
Let’s get started.
1. Take Care of over Due Accounts
Your payment history makes up a huge percentage of your overall credit score, a whopping 35% of your credit score to be exact. If you have any past due accounts of any sorts, this will affect your credit score tremendously.
The goal here is to have those accounts marked as paid or “current”. However, even if you are making the minimum payments for a short time until you are caught up, at least you are not in the red and having it past due.
If you do make minimum payments, keep in mind that you are basically paying interest and putting more of a hole in your pocket, do everything you can in order to pay those bills off fully!
This may involve you needing to make a phone call to your creditors to do some negotiating to avoid the charge-off, and in some cases, if you pay in full you may be able to convince them to delete the charge-off status.
2. Get Your Free Credit Report
If you have recently tried to take out a loan or anything that involves your credit and were denied, you are entitled to a free credit report. Act quickly as you only have 60 days to receive this after you were denied action.
You are also entitled to a free credit report if you have been a victim of fraud, identity theft, you are unemployed, or seeking for a job within the next 60 days. You are also allowed to have a free credit report once every 12 months.
3. Check for Mistakes
Once you have your credit reports in your hands, read through them very attentively. This may get overwhelming as there is a lot of information and jargon that you may not understand, so take your time if needed.
This is the time where having records will literally save you, how else are you expected to remember every single credit card, car, mortgage payment you have ever made? If you do not have records, it is time to start keeping them, there are plenty of great apps to help with keeping track of your payments.
The more careful you are at reading your credit report, the more chances you have of finding a mistake to dispute, so if you need to hire someone to help you read it, do it. Remember your DIY credit repair is your chance to save your credit so do what you can.
4. Dispute the Mistakes
If you find any information that is inaccurate, not verified, or incomplete, you have full rights to dispute these possible mistakes. Your dispute can either be done online or by mail, however, do keep in mind that doing it online means no paper trail so take lots of pictures and back them up.
Include all copies (do not include originals) of all your proof of payments, of your credit score with notes, and a well-written letter. The credit bureau has 30-45 days to get back to you about your dispute.
Each false information that you find is a separate dispute, so use a system to keep track of each one. You can also contact your bank in which the problem occurred because they have the power to change any false information that led to your credit being altered.
5. Make a Credit Repair Plan
For the information that was accurate, you will need to create a plan and tackle these problems so that they do not create even worse credit.
This may include:
- Overdue accounts that were sent to collections
- Past due accounts that were charged off
- Any line of credits, overdrafts, or credit cards that are maxed out past their limit
Make a list in order of importance and tackle these problems one by one. You may want to pay off the accounts with the highest interest first so that you are staying on top.
6. Take Higher Account Balances to Below Your Usual Limit
Credit cards can help you to build your credit significantly, however, if you abuse how you use them, they can also destroy your credit with credit utilization. Credit utilization is the ratio of your outstanding debt to your common credit card balances.
For example, if your card limit is 5,000 and you are always sitting at around 3000, then your credit utilization score would be sub-par. To discover this, divide your current card balance by your credit limit, then multiply that by x100.
7. Build New Credit
Now that you are starting to get your head above water, it is time to do everything you can to build back your credit score. This is the most important factor in DIY credit repair and your chance to get out of debt.
Start by limiting the amount of time you apply for credit, as every denial hurts your score. Then apply for a secured credit card to safely build your credit score back up. You will have to pay a deposit on this, but it is definitely worth it.
There are some great credit repair companies that can help you too, read more here to learn about which one is right for you.
Learn More DIY Credit Repair Hacks and Build Your Credit Back Today!
Being in debt sucks, and having bad credit is even worse. Follow this DIY credit repair carefully and you will be on route back to normal credit soon enough. Just remember you are not alone and there are many companies out there to assist you in building back your credit.
If you would like more financial advice, check out our financial articles such as how to take out loans with great success.