Home > Credit 101 > Help! I Can’t Fix My Bad Credit

Comments 1 Comment

You’ve actively tried to improve your credit. You’ve pulled your free credit reports, checked for errors and identified what was holding you back. But even though you’ve instituted some good behaviors, like addressing that old collection account or making minimum payments on your credit card account, your bad score just won’t budge. What should you do next? Here are a few options.

1. Give It Some Time

Bad credit is often the product of some pretty big missteps, like a bankruptcy, foreclosure, judgment or default. And that negative information is going take some time to age off of your credit report. Their effects will, however, lessen over time, so if you continue to focus on the basics (like making payments on time and keeping balances low) your score should ultimately start to climb. You can monitor your progress by viewing your free credit report summary every month on Credit.com.

2. Review Your Budget

Addressing a major derogatory item — like paying a long overdue collections bill — is a great first step to getting your credit out of the gutter, but your score isn’t going to improve dramatically unless you also fix the issues that were causing you to miss payments and run up big balances in the first place.

“Look at your budget and see if all the bad activity [is] really behind you,” said Martin Lynch, director of education for Cambridge Credit Counseling Corp. For instance, if you’re still overspending, “that prevents you from knocking down balances as effectively as you could,” he said.

3. Look Into Some New Starter Credit

Improving credit isn’t just about removing the negative — you also might need to add some new positive information. Getting new credit to demonstrate proper payment behavior might seem impossible, given the state your credit is in. But there are certain types of financing out there that are designed to help borrowers rebuild. You could, for instance, consider opening up a secured credit card or a credit-builder loan from your local bank or credit union, Lynch said. Making on-time payments on these loans for around six months should help you score, he said. (Just be sure to carefully read the terms and conditions associated with any financing you are considering, since subprime credit lines may have fees or higher interest rates.)

4. Consider Collateral Damage

Credit scoring is admittedly complex, and there are certain steps a person looking to improve their credit may take that could actually send their score in the wrong direction. For instance, you may feel inclined to close an old credit card account that you finally paid off. But the closure could wind up negatively skewing your credit utilization rate (essentially how much debt you are carrying versus how much credit has been extended to you) and hurt your score, Lynch said — at least until you add new credit or pay other high credit card balances down. That’s not to say closing the card isn’t in your best interest. (It can be the right move if you don’t trust you’ll refrain from running up a new balance you can’t afford.) But it does mean that you need to consider all your credit-related moves very carefully and do some research before making them.

5. Get Some Help

If it’s already been a while or your bad credit is a result of problems you have little control over (such as identity theft or credit report errors), you may want to consider consulting a professional, like a credit repair company, consumer attorney or credit counselor. Just be sure to thoroughly vet anyone you are considering doing business with, as not all companies out there have your best interests at heart. A good credit repair company will explain exactly what it can and cannot do on your behalf and will never guarantee a “100-point rise in your credit score.” (You can learn more about credit repair here.) 

More on Credit Reports & Credit Scores:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • William Cohen

    When it comes to improving one’s credit, #1 (allowing time to pass) is the best and often times cheapest option. Defaulted debts, and even judgments will age off of your credit report after 7 years, regardless of whether or not you pay them. This will, of course not prevent creditors from continuing to collect, especially if they have a judgment; only bankruptcy will do that.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team