Improving Your Credit

If you want to improve your credit, it will take two things:

commitment
patience

Commitment is important because improving your credit is a multi-step process. Many of the steps are not one-time actions. They will require you to make specific choices every day as you focus on your goal of improving your credit.

Patience because there are no quick fixes. It takes time to improve your credit.

Use this checklist to help you make a plan for improving your credit.

Get and review your credit report. Go to annualcreditreport.com for your free, annual credit report from each of the three credit-reporting agencies—Equifax, Experian, and TransUnion.

Dispute and correct any errors. Look for inaccurate information, information that does not belong to you, and outdated information still being reported. In general, negative information should only be reported for 7 years. Check to make sure negative information is not hanging around longer than it should.

Late payments remain for 7 years from the original delinquency date.
If a series of late payments was brought current, then the 7 years is based on the first missed payment.
Collection accounts stay for 7 years based on the delinquency date of the original account—for credit reporting purposes treated as a continuation of the original debt.
Chapter 10 bankruptcy remains for 10 years because none of the debt is repaid; chapter 13 bankruptcy is deleted after 7 years because some of the debt has been repaid.
Civil judgments are debt you owe through the court. These stay on your report for 7 years from the filing date.
Tax liens remain for 7 years once they are paid. Unpaid tax liens remain for 10 years from the filing date.
Inquiries remain for 2 years.
Payment on any of these debts does not affect the amount of time it is reported, except for tax liens. Once tax liens are paid, the 7-year clock begins.
There reporting time limits do not affect the amount of time a creditor can try to collect debt from you or sue you for payment.

Make sure anything that is in the collection accounts section of your reports belongs to you. If there is accurate collection account information, make sure the balance is not being reported as outstanding with the original creditor. The original creditor is the business that you had the debt with, but then sold it to a collection agency. If the original credit charged off your debt and sold it to a collection agency, the reported balance should be $0.

Pay all of your bills on time and as agreed.

If you have credit cards, make sure you are only using 20 percent or less of your credit limit. Keeping your credit utilization rate low improves your credit scores.

Make sure all of your debt balances are declining.

Ensure the information in the public records section is accurate. If you owe money for child support or taxes, make a plan to start repaying this money. Tax liens will be reported as long as you owe them and then for another seven years.

Consider a credit building strategy.

Get a secured credit card. These cards are designed for people with no or poor credit. To get a secured credit card, you must make a deposit with the bank that issues the credit card. Often it is around $500, which is also generally the credit limit. The credit limit is the maximum you can charge on the credit card.
Get a credit-building loan. These installment loans are structured in different ways at banks and credit union. Generally, they are small loans generally $1000 or less, which you repay through regular, scheduled payments over 6 months to a year. Often, credit unions and banks require the loan to be secured with an amount equal to the principal of the loan in a savings account or certificate of deposit. In some cases, the amount you borrow if out into a secured account from which you make regular payments plus interest. If you default on the loan, the credit union or bank will seize the deposit to cover the loan.
Become an authorized user on an account. This provides you with a credit card in your name, but someone else owns and is responsible for the account. You can use the card and as long as the primary accountholder uses it

Don't apply for a lot of credit; this will damage your credit instead of building it.

Ask for a “good will” deletion. If you have paid your bills on time and as agreed with a creditor, but missed a payment or two, you may be able to negotiate a deletion of the negative entry.

Ask a creditor not to report negative information to the credit bureaus in exchange for payment. This only works before a debt has been turned over to a collection department or agency.