Credit Repair

How to Improve Your Credit Score

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You walked into work and were blindsided by a layoff notice. Your son broke his leg in a skateboard accident and you have no medical insurance. Your car blew its transmission. If this sounds familiar, you may need to improve your credit scores and repair your credit profile.

Credit Repair: Step-by-Step Process

Credit repair doesn’t happen overnight, but these steps can help you improve credit scores and develop a debt management plan.

  • Stop using credit: If your credit scores are so low they’re hiding underground, you must stop using credit. This is not the time to charge a new lawn mower or buy a new car. Credit scoring firms look at your credit utilization ratio, which measures how much of your available credit lines you’ve used. The ratio is expressed as a percentage and is calculated by dividing the amount you owe by your maximum credit line. If your bank card has a credit line of $12,000 and you owe $6000, your credit utilization ratio is 50 percent. Although creditors may provide generous credit lines, your creditworthiness takes a hit if your credit utilization ratio is higher than a third of your available credit. According to FICO, the biggest credit scoring company, credit utilization ratio accounts for 30 percent of your FICO score.
  • Bring delinquent accounts current ASAP: Past-due accounts can quickly trash your payment history, which accounts for 35 percent of your FICO scores. If you can’t bring past due accounts current right away, contact your creditors to work out a repayment schedule. The longer past due accounts are allowed to “age,” the lower your credit scores will go.
  • Order and review your credit reports and scores: The National Foundation for Credit Counseling (NFCC) advises consumers to review their credit reports and scores annually. You can order one free report each year from each of the three large credit bureaus on the government site, but the site charges a nominal fee for credit scores. You can, however, get a free Vantage Score right here at in about a minute. It’s truly free; unlike other sites, you needn’t provide a credit card and there’s no obligation.Review all information contained in your credit reports and correct errors, as they can reduce your credit scores. Credit scores can vary, but significant differences between bureaus could indicate fraud or identity theft.
  • Create and use a cash-based budget: It’s easy to fall back into using credit cards for convenience, but effective debt management requires developing a cash-based budget. Use your debit card instead of a credit card at the grocery store and gas station. Make realistic adjustments to your budget to achieve your goal of using cash instead of credit cards.
  • Don’t close your accounts: This might seem to go against your goal of becoming debt free, but closing your credit lines reduces your available credit and raises your credit utilization ratio. Closing accounts also shortens your credit history, which accounts for 15 percent of your FICO score. It’s a good idea to use credit cards periodically to avoid creditors closing your accounts for inactivity. This doesn’t mean charging first class tickets to Hawaii for your extended family, but charging only amounts you can pay in full when the bills arrive.

Things to Keep in Mind

Credit repair requires patience: Don’t fall for “instant credit repair” scams that promise to cleanse your credit and boost your scores. There are no short cuts, but paying these con artists leaves less money for you to pay down your debt.

Help is available: If you’re having problems making or keeping a budget, non-profit credit counseling agencies can help. NFCC and the U.S. Department of Housing and Urban Development (HUD) provide lists of approved credit counselors.

Track your progress: Check your credit score for free on LendingTree each month to track your progress, but don’t be discouraged if it doesn’t increase as fast as you’d like. Focus on your overall goals of paying off debt and living on a cash-based budget. It takes six months to a year to make serious headway on your credit repair.

Finally, procrastination is your worst enemy. While you may not be a numbers person, or Mercury is in retrograde, or you have a headache, don’t delay using these steps to clean up your credit and improve credit scores.


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