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Credit Repair: Not A Lost Cause

Updated August 2021

If increasing your credit score sounds stressful, you’re not alone. Credit repair can seem confusing, but there are easy steps you can take to start today! If corrective actions are taken, you could start to see slight improvements within 30 to 60 days. Of course, nothing will change if you do nothing at all. Use this credit repair cheat sheet to boost that powerful three-digit number into something you can be proud of.

Kickstart Credit Repair by Viewing Your Credit Report

Request a copy of your credit report from AnnualCreditReport.com. Equifax, Experian and TransUnion are continuing to offer free weekly credit reports during the pandemic. Set up a reminder to request one report each four months, so that you can monitor your credit score throughout the year. Monitoring your credit score on a quarterly basis or even monthly basis will help you uncover any potential discrepancies or mistakes.

Credit Report

Correct Errors

Person making a phone call

Check your credit report for errors. If you find an error, make sure to dispute it right away. You can dispute errors online through Experian, TransUnion, and Equifax. You can also call any of these agencies to dispute an item over the phone via the phone numbers provided on your credit reports. You also have the option to dispute any items via direct mail.

Catch Up On Payments

Thirty-five percent of your credit score is determined by your payment history. So being behind on payments will negatively affect your credit score.  Paying your bills on time will show lenders that you are a responsible borrower, and will raise your score over time. You want to avoid items going to collections, as this will remain on your credit score for seven years, even if you pay it off. Though paying a collections debt won’t erase it from your credit report, it will show that it has been paid. Learn more about the other factors that affect your score. 

Pay bills marked on calendar

Improve Your Credit Utilization Ratio

Credit application

Your credit utilization ratio is a percentage that is used to represent the amount of outstanding balances on all of your credit cards divided by the sum of each of your cards’ limits. Having high balances compared to your available credit limit increases your credit utilization ratio, and has a negative impact on your credit score. Launch CU recommends that you keep your credit utilization ratio at 30% or less. One way to improve your credit utilization ratio is to request a limit increase on your primary credit card. The key is to not spend more, rather keep your spending about the same. This will lower your credit utilization ratio, and over time improve your credit score. Learn more about credit utilization here.

Don’t Throw Away Old Credit Cards

If there are credit cards that you don’t use, and you are thinking about throwing them away, don’t do it. Keep these cards active, and put them in a place where you are unlikely to use them. This will help lengthen your credit history and keep your available credit high.

Multiple credit cards

Be Careful About Opening New Credit Accounts

Opening new credit accounts

There is nothing wrong with applying for a credit card or a loan; however, you should be careful how often you do this. Every time you apply for a loan or a credit card your credit has to be pulled, which can have a major negative impact on your credit score if you have multiple lenders doing this in a short amount of time. In addition, opening numerous accounts at once can hurt your score by decreasing your average account age.

Get A Variety Of Credit Types

If you have gotten into financial trouble in the past due to credit cards, there are other types of loans that you can obtain to improve your credit score. These include: secured loans, auto loans, and mortgages. They can all help improve your score if payments are made on-time. Making on-time payments is key to building and maintaining a high credit score.

Home loan

We know credit repair can sound intimidating. Repairing your credit score will not happen over night and will require you to make changes to your current habits. Use the guidelines listed above and our debunked credit score myths to make smart and informed decisions. Improving your credit score takes patience and discipline, but will pay off in the long run. By improving your credit score you will also improve your ability to obtain a loan in the future and receive better interest rates on your loans. Everyone has to start somewhere. Why not start today! 

At Launch Credit Union, we’re here to help. Our Member Service are available to assist you at your local branch or at the number listed below!

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