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    7 Steps to Help Rebuild Your Credit Score

    You can negatively affect your credit score but you can also positively affect it — though it’s much harder and takes a lot more patience. What are some ways to change the trajectory of your financial future?

    7 Steps to Rebuild Your Credit Score


    Credit Basics

    What makes up your credit score?

    Your credit score isn’t a random calculation of your financial worthiness; there’s a method to the madness. Before you can start the process to rebuild your credit score, you need to understand what factors influence it so that you can focus your efforts in the right direction. 

    These are the key factors that make up your credit score: 

    • Payment history: 35%
    • Credit utilization: 30%
    • Length of history: 15%
    • Types of credit: 10%
    • New credit: 10% 

    Identify the problems with your credit score. Do you have a history of late payments? Do you max out the limits on your credit cards? Do you open new credit cards often?

    Once you begin to understand what caused your score to fall, you can follow these steps to correct the course. 

    image of credit score on smart phonePhoto from Canva

    How to Raise Your Credit Score

    1) Dispute errors on your credit report.

    The first thing you need to do is take a careful look at your credit report. We’re all human (yes, even the people handling and recording debts), and there’s always a chance that someone made a mistake on your report. Thankfully, if you find one, the Federal Trade Commission (FTC) has a well-laid path for you to get it corrected:

    Both the credit bureau and the business that supplied the information to a credit bureau have to correct information that’s wrong or incomplete in your report. And they have to do it for free. To correct mistakes in your report, contact the credit bureau and the business that reported the inaccurate information. Tell them you want to dispute that information on your report. 

    -Federal Trade Commission Consumer Advice

    Step 1: Tell the credit reporting company, in writing, what information you think is inaccurate. Use the FTC's sample dispute letter to make sure that you include all essential information.  Include copies (NOT originals) of documents that support your position. 

    • The credit bureau has 30 days to investigate. 
    • They are required to provide you with the results of their investigation. 
    • They will forward the evidence you shared to the business that provided you the report. 
    • Once the business investigates, they will share their results with the credit bureau who will then share them formally with you as well as provide you with a free credit report displaying the correct information. This free credit report does not go toward your free annual report.

    Step 2: Tell the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company), in writing, that you dispute an item in your credit report. Use this sample dispute letter.

    For more information on this process and what's required, visit the FTC — Disputing Errors on Your Credit Reports.

    0005-37771570128Photo by Avery Evans on Unsplash

    2) Carry less than your limit on your credit card. 

    Since credit utilization makes up 30% of your credit score, the lower the balance of your credit card, the better. Many follow the 30% rule. This means that you should spend up to 30% of your credit limit, but don't exceed it. Even if you make regular payments, the high credit balance can negatively affect your credit score since utilization is a key part of your overall score. 

    3) Increase your credit limit. 

    If you’re already spending well beyond 30% of your credit limit and are unable to make adjustments, then consider seeking out a higher limit so you can drop closer to the 30% sweet spot. 

    4) Pay your bills on time. 

    The best thing you can do for your credit score is to pay your bills on time. If this is something that you struggle with, there are a few tools to help you create better habits. 

    • Set up auto-pay. Set up your bills, utilities, and credit lines to auto-pay so that your bills pay themselves in a sense! Skeptical about this method of payment? Set a reminder on your phone to check your bank accounts a day or two later to make sure that all went through okay. 
    • Use a financial calendar. Don’t mix business with pleasure. Create a finance only calendar where you can schedule payment days and set reminders. 
    • Account for processing time. Don’t forget that payments take time to process (especially if you use snail mail and checks). Make your payment early enough so that if it takes 24-48 hours to process your payment, you’re still ahead of the due date. 


    Young couple calculating their domestic bills at homePhoto from Canva

    5) Become an authorized user on another account. 

    Have a family member or friend with outstanding credit? Although mixing family with personal finances isn’t always the best idea, becoming an authorized user can help raise your credit score. Plus, you don’t have to spend money or use the account to have your name associated with it. 

    6) Get on the phone with your creditor. 

    There’s a couple of things that hopping on the phone with your creditor can help accomplish.

    • Fix late payments. If you have a substantial history of making on-time payments, your creditor might be willing to waive the late fee and have the negative removed from your report. 
    • Clear outstanding collection accounts. Call them up and let your creditors know that you want to pay off your debt. Suggest paying in full and they might be willing to work with you. Just make sure that they agree to remove negative marks from your report!

    7) Pay off debt. 

    Get out of debt! There’s a wide scale to follow with getting out of debt. Dave Ramsey’s method tends to be the most aggressive. However, when followed, it’s known to be effective. 

    • Step 1: List your debts from smallest to largest, regardless of the interest rate.
    • Step 2: Make minimum payments on all your debts except the smallest.
    • Step 3: Pay as much as possible on your smallest debt.
    • Step 4: Repeat until each debt is paid in full.

    Just remember that paying off debt and rebuilding your credit score requires sacrifice and a lot of time, depending on how deep your debt goes. Set a plan and stick to it! 

    Is homebuying in your future? Learn how to get your finances straight before making the leap with our free guide below. 

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    Danielle Keech


    Danielle Keech

    Danielle Keech is a writer and content creator for MilitaryByOwner Advertising. She writes on military life topics, highlights clients’ open houses on social media, and manages the Military PCS Facebook group. She especially enjoys covering financial topics and helping military families exercise financial responsibility and plan for the future. Danielle has been a Marine Corps spouse for ten years (and counting!) and is a momma to four littles and one fur baby. She and her pilot spouse have lived in Virginia, Florida, Texas, California, Hawaii, and, most recently, Okinawa, Japan. And yes, you guessed it, Hawaii is her favorite duty station to date! Find MilitaryByOwner's Millitary PCS group here.

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