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How to Fix Your Credit — Once & For All

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Are you wondering what you can do to fix your score? Or if it’s even possible to do this? If this describes you, you aren’t alone — Experian’s 2015 VantageScore 3.0 data found close to one-third of Americans have a credit score lower than 601 — and the good new is, there are ways to fix it. Just know that building good credit won’t happen overnight; a solid credit history takes time, after all. You’ll also need to accept the fact that it’s going to take work. The steps will include getting a sense of your finances, going through them with a fine-toothed comb for any errors and pinpointing problem areas, like overspending, that you need to address. 

To fix your credit score:

  1. Know your credit score, and know the balances of your credit cards or other credit accounts.
  2. Find out which revolving accounts have the highest utilization (the amount of credit used versus the credit limit).
  3. Pay extra attention to lowering the utilization of these accounts and focus on returning them to good standing.
  4. Maintain healthy credit accounts, and start building a positive credit history that will help you reach your personal goals.
  5. Keep in mind that credit age is also a factor in your credit score, so avoid closing too many accounts. This can hurt your efforts to fix your credit score.

It won’t be easy, and it’s certainly not as fun as going shopping, but the relief you’ll feel at being able to take out new credit will be well worth it.

First Step: Check Your Credit

The first thing you need to do is get your credit reports and credit scores, so that you can gauge where you’re at and determine what parts of your score need work. You can get free copies of your credit reports from the three main credit bureaus — Experian, Equifax and TransUnion — once a year under the Fair Credit Reporting Act. (You can also view two of your credit scores for free on

You should get your credit reports from each of the major credit reporting agencies, as each may contain different data that could impact your scores. You’ll rarely know ahead of time which report is being pulled by a lender, so it’s important to make sure they’re accurate and you’ve addressed any issues.

What Will I See on These Reports?

You’ll see basic details about yourself — your name, birthday, address, etc. It’s important to review these to make sure they’re accurate. Note: Past addresses may also be listed, which is OK.
You’ll also see any financial legal issues you may have, like a bankruptcy, lien, judgment or wage garnishment. If one of these is bringing your scores down, take comfort in knowing these negative items eventually age off.
Beyond that is creditor information, which makes up most of your reports. This includes different accounts you have (loans, credit cards, etc.), their status (open/closed, in collections), balances, credit limits and payment details. This may also include dates of missed payments or when the accounts were sent to collections. From these details, your scores will be formed.

Credit scores are broken into five major categories:

  1. Payment History (35% of your scores) — Your history of repaying account debts
  2. Credit Utilization (30%) — How much debt you’re carrying in relation to your credit limit
  3. Length of Credit History (15%) — How long you’ve had active credit accounts
  4. Types of Credit (10%) — Your variety of accounts
  5. Credit Inquiries (10%) — Number of inquiries into your credit profile

Now that you understand what these reports cover and how your credit scores are calculated, you can begin addressing your issues.

You Can’t Fix Bad Credit in 30 Days

We get it — you’ve found problems, whether they’re errors or areas you need to focus on, and you want results, fast. But these revisions can’t happen overnight. For instance, you can’t lengthen your credit history right away. You may be able to fix your credit utilization — the amount of debt you have relative to your credit limits and the second most important factor in your credit scores.
It’s best to keep your credit utilization below 30% (ideally 10%) to show creditors you can manage your available credit responsibly without maxing out your cards. If you went over that 30% mark, you can quickly undo any small drop you may have noticed in your scores by paying off those balances and getting your percentage back to less than 30%.
Still, that’s an exception to the rule. Some credit mistakes can impact your score for years. It’s tough to hear, especially if you were really counting on that mortgage approval to finance your dream home. So checking your credit on a regular basis is important. If you spot a mistake and can fix it before you apply, you can avoid that “Dear John” letter from a lender. (Here’s how to apply for a mortgage with bad credit.)

How Long Does It Take to Repair My Credit?

If you have accurate negative information on your credit reports, it can take awhile for it to age off. Here’s how long negative marks remain on your credit report:

  • Late Payments: 7 years from the late payment date
  • Foreclosures: 7 years
  • Collection Accounts: 7 years and 180 days from the date of delinquency on the original debt
  • Short Sales: 7 years
  • Bankruptcies: 10 years from the filing date; 7 years for Chapter 13 cases
  • Repossessions: 7 years
  • Judgments: If the judgment has been paid, 7 years. If unpaid, potentially longer
  • Tax Liens: 7 years after they are paid
  • Charge-Offs: 7 years from the date the account was charged off

If you have inaccurate negative information on your credit reports, you can see some big changes to your credit scores as you work to fix them. Credit reporting agencies must respond to disputes within 30 days (some can take 45 days), which is much shorter than the years-long wait you’ll face with accurate derogatory information.
If the credit reporting agency sides with you, they must remove the mistake immediately. In a 2012 Federal Trade Commission study on credit report accuracy, 79% of people who disputed an error on their credit reports were able to have it removed.

Steps to Rebuild Your Credit

Remember, your path to better credit will vary significantly depending on your credit score problems. Here’s how to rebuild it.

1. Pinpoint Your Credit-Score Killers

If you have one of those letters we mentioned earlier that details your credit problems, you have some idea of what’s holding you back. Even though it may seem complex, as we mentioned, your credit score is based on five core factors: payment history, credit utilization, age of credit accounts, mix of credit accounts and history of applying for credit. They’re not equally weighted.
Your payment history is the most important factor, accounting for 35% of most scores. That’s why even just one late payment can drop your score significantly.

Your credit utilization is the second biggest factor, accounting for 30% of most scores. This encompasses the amount of revolving credit (i.e. credit cards, home equity lines of credit) you’re using compared to the limits on those accounts.

The age of your credit accounts is another important factor, accounting for roughly 15% of most credit scores. This is calculated by looking at the age of your oldest account and the average age of all your accounts. If this is hurting your scores, not much can be done except not closing the accounts.

The mix of your credit accounts, which accounts for 10% of most credit scores, looks at how you handle different types of credit. There are two main types of credit — installment accounts (i.e. mortgages, car loans, student loans) and revolving accounts (i.e. credit cards and lines of credit). Creditors want to see you can handle both kinds of credit responsibly. If you’ve only had credit cards in the past, a car loan or a mortgage may improve your credit score, but it’s rarely a good idea to take out a loan just to build credit.

The last major factor, your history of applying for credit, which accounts for 10% of most credit scores, may be holding you back if you applied for several credit accounts recently. This factor also takes time to correct, but any hard inquiries into your credit will only ding your scores slightly, and as they get older they will have less of an impact. A year is generally when they begin to stop hurting your credit scores.

Now you know what’s hurting your credit scores. So what do you do? Since one of the fastest ways to see some improvement is by fixing errors on your credit report, that will be your next step.

2. Clean Up Your Credit Report

If you have mistakes on your credit report, you’ll want to start the dispute process as soon as possible. Credit repair is something you can do on your own or you can turn to the help of a professional credit repair company to help you fix your credit. Whichever option you choose, it’s important to start right away.

As we explained earlier, credit reporting agencies have 30 days to respond (with some exceptions). You can read more about how to start the credit-dispute process here.

For now, here are quick tips for determining how many credit repair letters you’ll need to write or file online:

  • You need to dispute each mistake with each bureau. Just because the same mistake appears on all three credit reports doesn’t mean disputing it with one of the bureaus will fix the others.
  • It’s not uncommon to find multiple errors on your credit report, and you’ll need to dispute each account separately. However, if you see multiple mistakes on the same account, you can group all of those mistakes into one dispute.
  • You can dispute credit report errors without any experts’ help, but for some people the process is too confusing, and they just want to hit the “easy” button. You can hire a credit repair company or law firm to represent you for a fee. A good credit repair company will never promise a “300-point jump in your scores!” — in fact, that’s illegal. They’ll be upfront about what they can do and will take payment after they’ve delivered.

For more help, consider this sample credit repair letter.

3. Start Some Positive Credit History

You may have been denied one kind of credit, but that doesn’t mean you’re shut out from borrowing entirely. If your payment history, credit utilization or mix of accounts are hurting your scores, opening new credit may help you rebuild credit faster.

There are credit cards designed to help called secured credit cards. These require a deposit that generally serves as your credit limit. If you don’t pay your bills, the card company can withdraw the deposit. If you open one of these cards, it’s important to make on-time payments and keep an eye on your credit utilization. Just because you have a card with a $1,000 limit doesn’t mean you should charge $800 — that can hinder your efforts.

Here are some other quick tips to consider as you fix your credit:

  • Pay down credit card balances and refrain from making new purchases. In fact, you may want to put your plastic on ice.
  • If you’re worried about taking out a credit card, consider a credit-builder loan with a bank or financial institution.
  • Refrain from closing old credit card accounts once you have them under control, as this can affect your credit utilization and make it harder to build a solid credit history.
  • When you’re ready to shop for new credit, like a mortgage or auto loan, rate shop during a 30- to 45-day window. Most credit scoring models will group inquiries by type in that timeframe.
  • Consider paying outstanding collection accounts. Some newer credit scoring models ignore paid collections entirely.

Finally, don’t give up! If you build good habits over time, you’ll fix your credit and maintain good scores.

This article has been updated. It was originally published January 29, 2016.

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