Credit Repair Guide
How Long Does Credit Repair Take?
In our last guide, we went in depth about what could be bringing down your credit score. There are factors we mentioned that you might not even know are dropping your overall credit rating. If you’re not sure exactly what is affecting your credit, go back and read our insight on who needs credit repair.
You’ve decided that you need to raise your credit. Most likely it’s because you’re looking to apply for a loan soon and you’re ready to take the next financial step towards buying a home, car, or starting a small business. Your credit score isn’t quite where you want it to be and you need it to improve quickly because you’re on a deadline.
One of the first questions people have about credit repair is, “What can I do today that will affect my credit immediately?” We’ll explain how long you can expect it to take for different repair and rebuilding actions to reflect on your credit score. In addition, we’re going to set you up with some long-term good credit habits, and show you how to counteract things like overwhelming debt and identity theft.
What Can I Do Right Now to Improve My Credit Score?
Cleaning Up Outstanding Balances
If you’ve been reading the other parts of this guide, you might already know what is keeping your credit score down. For example, if you have outstanding balances that have been sent to collections, but you just haven’t gotten around to taking care of them (we’re all busy people), you probably know that your credit score is suffering as a result. In that case, you should go through your finances and examine any areas that you can remedy immediately. Any overdue bills, unpaid balances, or creditors that have been hassling you should be addressed as soon as possible. Tying up any loose ends can potentially impact your credit score in a big way.
Showing Your Progress to Credit Agencies
That leads us to the next point. If you have cleared up a few obvious negative items that were holding you back, you can now present this information to the credit bureaus for review. It is the job of creditors, banks, and other lenders to present the bureaus this information.
Yet, it doesn’t always happen this way. Some information is updated on your credit report right away and other instances might take a month or so to go through. If you haven’t had your one annual free credit check yet, we’d suggest you wait about a month (or more if you can) after your changes were made to do a credit check. If you still aren’t seeing the information reflected correctly, it’s time to contact the bureau directly.
Reporting Errors to the Bureaus
One of the other things we talked about last time was fixing errors on your report. Duplicate items, typos, outdated information, old debts that never got removed after the account was paid off — these kinds of errors are surprisingly common, and can hurt an otherwise perfect credit score. If you feel that you have a glaring error that is holding back your score, you can go directly to the bureau with proof to get that resolved right away.
As long as you have time to find evidence to back up your claim and take the item to the credit agency, you could see a boost in your score. However, you should be aware that the process will most likely differ depending on what you’re disputing. It could be anything ranging from a small to a large mistake and could involve any number of topics included in your credit report. Some fixes might go right through, while others might be more challenging. Just make sure that you’re armed with as much knowledge and proof as possible and you’re willing to stick with it.
Going With a Credit Repair Agency
On the other hand, hiring a credit repair agency might be an easier option for you. Doing so takes the stress off of you regarding all of the leg work required to make the change. It’s the job of a credit repair agency to fix credit report mistakes, so it’s possible that they may find several mistakes that you could have missed on your report. This means that you might have a few small mistakes that can be quickly fixed, but maybe there are also larger ones as well. The point is, if you’re on a deadline and your credit repair agency has a plan to maximize your score, it might take time — time that you don’t have. You should be upfront with them about your plans, your preferred timeline, and your overall goals. They will let you know how likely it is that you’ll see a change in your score in a short period of time.
How Long Will it Take to Fix My Credit?
As a rule of thumb, a credit bureau has 30 days from the date that they receive your dispute to address it. They must do an investigation to show if the dispute has any merit. They’ll take a look at your report, examine your history, and review the proof that you sent over to them. They will then get back to you within 30 days letting you know what their conclusion is about your claim. If it warrants a change to your credit report they will notify you within five days after completing their investigation. If you don’t receive a reply in 30 days, be sure to send a follow-up letter. Now, here is the tricky part: there is no standard for how long an investigation should take. As we said, many smaller issues may be addressed and resolved quickly, while others might take longer to investigate. Yet, if they do decide to alter your report, they will let you know within those five days and they will give you an additional free viewing of your improved report.
How Can I Work on Fixing My Credit Score Long Term?
How Long is “Long Term”?
Solid, long-term good financial habits are, of course, a necessity to maintaining a high credit score. Even if you see a boost in your credit due to some quick fixes, it might go right back down if you’re taking on too much debt and still maxing out your credit cards. You might be wondering, “I’ve been working on my credit for a while now. When will I see results?” Good question. How long term is “long term?” That all depends on your individual situation. Each credit report is different from the next. One person might have late payments and someone else might have a maxed out credit card that is holding them back. Each of these scenarios requires a different level of attention in order to fix the problem.
Depending on the severity of the situation and the level of action needed to resolve it, you could be looking at up to six months to see a change. Oftentimes, if you’re trying to get pre-approved for a home loan or something similar, your lender will tell you to work on your credit for about six months before getting back in touch with them. However, the longer that you have, the better.
What Areas of My Credit Should I Focus On?
What kinds of changes are we talking about? Some of them we have discussed already, but let’s get an actual breakdown of the absolute most important areas of your credit that need to be fixed long term. Credit bureaus use a system that is basically broken down similar to this:
- 35% payment history
- 30% total debt and what you currently owe
- 15% average ages of your credit history
- 10% new credit
- 10% types of credit you’re currently utilizing
While each bureau’s numbers are slightly different, the two most important factors to work on are making your payments on time and chipping away at the debt you currently have. As we mentioned, credit mistakes like missed payments can stay on your report for seven years. This means you’ve got a bunch of those mistakes to try and counteract. If you’re doing your best to get your score up quickly, but the results just aren’t coming, it’s possible that it just might not be in the cards right now. Working on getting your credit together for a couple years will have a much larger impact than three to six months. If you’re lucky, and you’ve only missed a single payment, you can try appealing to your creditor’s charitable side with a goodwill deletion request.
How to Deal With Identity Theft
What’s more, identity theft can be extremely damaging to a credit score. Identity thieves do everything they can to get your personal information. If they’re lucky enough to get your Social Security number, then they’re able to open up lines of credit in your name. This means you could have loans or credit cards taken out in your name that are never paid off. Resolving these issues usually takes time. You know that the account isn’t yours, but the bank and credit agencies need proof that backs up what you’re saying.
You can put a credit freeze on your credit report for 90 days if you suspect fraud, which will stop lenders and creditors from checking your score, which can negatively affect your credit score as well. This will make it harder for any thieves to open new accounts in your name. In addition, if you have some proof of the fraud, you can put a fraud alert on your account which lasts for seven years and does not impact your credit score.
Cleaning up a fraudulent mess can take some time. Each issue on your report will need to be addressed individually, especially if they are from multiple banks, lenders, and credit card companies. Don’t despair! It’s not hopeless. It just takes perseverance and dedication. In the meantime you can still work on your own good spending habits in order to improve your score. This is another case where having the attention and resources of a professional credit repair company can help. The thoroughness and understanding of the disputing process offered by credit repair professionals can be a powerful aid following identity theft.
Going With a Credit Repair Agency
On the other hand, hiring a credit repair agency might be an easier option for you. Doing so takes the stress off of you regarding all of the leg work required to make the change. However, it’s the job of a credit repair agency to fix credit report mistakes, so it’s possible that they may find several mistakes that you could have missed on your report. This means that you might have a few small mistakes that can be quickly fixed, but maybe there are also larger ones as well. The point is, if you’re on a deadline and your credit repair agency has a plan to maximize your score, it might take time — time that you don’t have. So, you should be upfront with them about your plans, your preferred timeline, and your overall goals from the interaction. They will let you know how likely it is that you’ll see a change in your score in a short period of time.
How Can I Consolidate My Debts?
Another long term fix includes debt consolidation. If you’re struggling to keep track of all your loan payments and you’re not completely sure which charge is coming from where, it might be time to think about consolidating your debts. Let’s create a scenario in which you have five payments that are overdue. Each of those payments has been sent to creditors who are now reporting the overdue status of your payment to the credit bureaus. Now, you’ve got five different negative items on your credit report, which is obviously not ideal. You can work with a debt consolidation agency to merge all five payments into one. This way, you’re seeing one entry on your credit report and not five.
You’re still going to have to pay off that debt over time in order to make a huge impact to your credit score, but you won’t be slammed with five times the negative information if you happen to be late on another payment.
There are a couple ways to consolidate your debts. Some companies will offer you refinancing options, such as with auto loans, which involve taking out a new loan to pay off all of your debts and consolidate the charges into one loan. The only downside to this is the fact that you have to take out another line of credit, which will be reported on your credit history. Other companies will simply act as the middleman for you. You will pay them a lump sum each month and they will pay all of your bills for you. In any case, your credit report will only reflect the debts as if they were one loan.
In the next guide, we’re going to discuss specific instances in which it would be beneficial to reach out to a professional credit repair service instead of doing it yourself. We’ll go over in detail exactly what credit repair agencies can do for you and how long it could take. Although there is a lot of information out there, credit repair professionals are trained and skilled at fixing errors and helping you meet your credit goals. We’ll also talk about why you shouldn’t be afraid to seek their expertise.
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