How to Repair Your Credit Yourself

If you’ve run into trouble with your credit, don’t pay someone else to try to fix it for you. Most of the things they’re going to do are actions that you could take on your own. In this post, we’ll walk through how to repair your credit score yourself by following these 10 simple steps.

1. Understand How FICO Scores Are Calculated 

The first thing to know about your credit score is how it’s calculated. FICO makes this information public on their website and provides plenty of helpful examples that can add or detract points.

In a nutshell, your credit score is calculated using information reported to the credit bureaus across five major categories:

  • Payment history = 35 percent
  • Amounts owed = 30 percent
  • Length of credit history = 15 percent
  • New credit = 10 percent
  • Credit mix = 10 percent

As you’re using your credit, always think to yourself how the action you’re going to take will either help or hurt one of these specific areas.

2. Review Your Credit Reports

According to the Fair Credit Reporting Act of 1970, consumers have the right to download a free copy of their credit report up to three times per year (once from each of the three major credit bureaus every 12 months). 

To know specifically what’s wrong with your credit history, you’ll want to download your report and review it. Look for things like errors and take note of any delinquent accounts.

3. Dispute Errors

If you do find any errors on your credit report (such as payments that are marked as late but were actually paid on time), then you can report them to the credit bureaus. This can be done by simply going to the bureau’s website and filling out an online form. Once submitted, the bureau will have 30 days to respond or the error must be removed.

4. Eliminate Delinquent Debt

If your credit report is showing that you have any delinquent debt that you knowingly haven’t paid yet, then it’s going to be critical to get this resolved as soon as possible. This will help the “payment history” and “amounts owed” portions of your FICO score which has a combined 65 percent influence.

The best way to do this would be to pay the balance in full if you have the money to do so. However, if that’s not possible, then consider calling the credit card company and try to reach an alternative agreement. For instance, if you can negotiate to make a series of smaller payments on time over the next 1 to 2 years, then they might remove the delinquency status from your account.

5. Consolidate Revolving Debt

If the credit card companies won’t work with you, or you’ve got too many to keep track of, a better approach may be to apply for what’s called a consolidation loan. This is where you essentially take out a new loan that will be used to pay off all of these smaller loan balances.

This is particularly useful when you’ve got revolving credit card debt. Usually, the consolidation loan rate will be much cheaper than the credit card rates, so you’ll incur less interest. Plus, since the consolidation will be an installment-based loan, this will free up the balances on your revolving debt and reduce the amounts you owe. That will in turn should help to increase your score. 

6. Don’t Close Your Existing Cards

Most people think that a responsible way to manage their credit is to cancel cards that they’re no longer using. But the opposite is actually true.

This is mainly because the “amounts owed” factor (which accounts for 30 percent of your FICO score) is based on something called your credit utilization ratio. Your credit utilization ratio is the amount of money you owe divided by your total available credit. Therefore, the more credit lines you have open, the lower your ratio.

Leaving your cards open also helps with the “length of credit history” factor which accounts for 15 percent of your score. You could throw these unused cards in a drawer and never use them, and it would help to age your accounts and add points to your FICO.

7. Request a Credit Limit Increase

Along the same lines of leaving your existing credit cards open, you can also request a credit limit increase. Again, the more credit you have available, the lower your credit utilization ratio will appear. 

Just be careful not to do this too many times or too frequently. When you make a request to your credit card provider for a limit increase, they make a “hard inquiry” which is when they pull your credit history and score. If you do this too many times within a 12-month period, it can detract points from your FICO score.

8. Don’t Open Any New Cards

Since we’ll want to limit the number of hard inquires to your credit history, that means you should also avoid opening any new credit cards as well as applying for any new loans and bank accounts. Although opening new cards would technically help to lower your credit utilization ratio, if you’ve already got several credit cards open and reduce how often you use them, then that should be all the credit you need.

9. Use Your Credit Cards for Essentials

One of the best (but scariest) things you can do to repair your credit yourself is to actually use your cards. It’s not a good idea to stop using credit cards altogether because you won’t owe anything at all, and therefore you’ll have no payment history. It’s much better to spend even just a few bucks and regularly pay it off to demonstrate good financial responsibility.

This is why I’d recommend reserving your credit card usage to just the bare essentials. Pay for things you absolutely need like gas and groceries. For everything else, stick with cash.

10. Make All Payments on Time, Every Time

Again, the best thing you can do to repair your credit is to show you can reliably make your payments on time and in full every month. So that’s what you need to start doing right away. For all those essential purchases in the previous step, pay your credit card bills no matter what.

My favorite way to accomplish this is to set up my accounts for automatic payments. Then all I have to do is just make sure that I’ve got enough money in my bank account to cover it every month. Do this for long enough, and it can contribute as much as 35 percent back to your FICO score.

To keep on your credit card balances, a budgeting app like Buxfer can be helpful. Buxfer syncs with your accounts and keeps track of your transactions in real-time so that you’ll always know how much you’ve spent and what your payments will be. 

Click here to find out more about how Buxfer works with your other accounts. 

Image credit: Unsplash

Comments are closed.

Create a website or blog at

Up ↑