How to start repairing your credit in 9 steps

Last updated Apr. 18, 2025 by Charles Zemub

How to Start Repairing Your Credit in 9 Steps

Credit repair is a significant undertaking that can positively impact your financial health and future. Whether due to past financial mistakes, unexpected expenses, or unforeseen life events, many individuals find themselves needing to repair their credit at some point. Rebuilding credit takes time, discipline, and a strategic approach. This guide will walk you through nine essential steps to repair your credit effectively.

Step 1: Obtain and Review Your Credit Reports

The first step in repairing your credit is understanding what it looks like right now. Obtain a free copy of your credit report from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You are entitled to one free copy from each bureau annually through AnnualCreditReport.com.

Once you have your reports, review them carefully. Look for any inaccuracies such as incorrect account information, wrongly reported late payments, or unfamiliar accounts. These inaccuracies can significantly impact your credit score and should be addressed promptly.

Step 2: Dispute Errors on Your Credit Reports

If you find any inaccuracies in your credit reports, take action immediately. You can dispute errors directly with the credit bureau that reported them. This process can typically be done online, by phone, or via mail.

Provide any supporting documentation to substantiate your claim and ensure you keep copies of all correspondence. The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate disputes typically within 30 days. Corrected errors can lead to an increase in your credit score.

Step 3: Pay Down High Credit Card Balances

Your credit utilization ratio—the percentage of your available credit that you are currently using—accounts for a significant portion of your credit score. High credit card balances can negatively impact this ratio and, consequently, your score.

Work on paying down your credit card debts, striving to maintain a utilization ratio below 30%. Start with paying off those cards with the highest interest rates or the highest balances first. This strategy lowers your debt faster and can improve your credit score over time.

Step 4: Address Past Due Accounts

Bringing past due accounts current is crucial to repairing your credit. Contact your creditors to negotiate payment plans or to settle the debt. Communication is key; many creditors are willing to work with you if you demonstrate a commitment to making regular payments.

If you are unable to pay the full amount, inquire about the possibility of a "pay-for-delete" agreement. While not a guaranteed option, some creditors might agree to remove negative information from your credit report in exchange for full payment of the debt.

Step 5: Avoid New Hard Inquiries

Each hard inquiry on your credit report can slightly lower your credit score. These occur when you apply for new credit or loan accounts. Limit new hard inquiries by refraining from opening new credit accounts while you are in the process of repairing your credit.

If you must apply for credit, research lenders who perform soft inquiries instead. Unlike hard inquiries, soft inquiries do not affect your credit score.

Step 6: Become an Authorized User

If possible, become an authorized user on the credit card account of a responsible family member or friend. Their positive payment history can be reflected in your credit report, which may improve your credit score.

Ensure the account holder maintains a healthy credit card balance and makes payments on time, as any negative activity might also reflect on your credit report.

Step 7: Start Building Positive Credit History

To repair your credit, you need to establish a positive credit history. If you don’t have any active credit accounts, consider applying for a secured credit card or credit-builder loan. These are designed for individuals with low or no credit and require a security deposit for the credit limit.

Use these accounts responsibly by making small purchases and paying them off in full each month. This behavior will help establish a positive payment history over time, leading to an improved credit score.

Step 8: Monitor Your Credit Regularly

After taking these steps, make a habit of regularly monitoring your credit report and score. This will help you track your progress and alert you to any signs of identity theft or new inaccuracies.

Consider using a credit monitoring service or enrolling in identity theft protection to stay informed and safeguard your credit.

Step 9: Practice Patience and Persistence

Finally, patience and persistence are paramount when it comes to repairing your credit. The process takes time and ongoing effort, but the results are worthwhile. Stay committed to the actions that will positively impact your credit, and avoid any financial behaviors that may set you back.

By adhering to these steps, you are on the path to improved credit health and financial stability.

FAQs

Q: How long does it take to repair credit?

A: Credit repair duration varies depending on individual circumstances and the extent of the issues to be addressed. Minor errors might be corrected within a few months, while more significant financial reparations can take a year or more.

Q: Can I repair my credit without professional help?

A: Absolutely. Many individuals successfully repair their credit on their own by following structured steps such as obtaining credit reports, disputing inaccuracies, and managing credit responsibly.

Q: Will closed accounts hurt my credit score?

A: Closing an account can affect your credit score, particularly if it changes your credit utilization ratio or increases the average age of your credit accounts. It is best to evaluate how closing an account will impact your credit standing before proceeding.

Q: What is a good credit score?

A: Credit scores typically range from 300 to 850. A good credit score starts around 670, while scores above 740 are considered very good, and scores of 800 and above are excellent.

Q: Can old debts be removed from my credit report?

A: Most negative information, such as late payments or collections, can remain on your credit report for up to seven years. However, inaccuracies can be disputed and potentially removed earlier.

Q: How often should I check my credit reports?

A: It’s advisable to check your credit reports at least once a year. Regular checks help monitor your progress and identify potential inaccuracies or fraudulent activity.

By following these steps and maintaining good financial habits, you can take control of your credit health and set yourself up for a more secure financial future.