how to fix your credit
Photo by Jared Erondu on Unsplash

Credit is often the last thing we think of when we start planning for a large purchase – like a home or a car. The problem is, it takes time to build or improve credit. And if you only find out at the time of application that your credit isn’t good enough to be approved, you could be stuck waiting for months or even years to get to the point where it is. What if you don’t want to wait? There are plenty of ways to fix your credit – credit repair companies are quite common in fact. But you can also take the initiative to fix your credit more independently. Here’s everything you need to know about how to fix your credit on your own, so you can be sure you’re ready for your dream purchase when that time comes.

How to Fix Your Credit On Your Own

1. Obtain Your Credit Reports

Step one to fixing your credit on your own is obtaining your credit reports, which you can do through Before you do, here are a few facts to be aware of:

  • There are three credit reporting agencies (CRAs): Equifax, Experian, and TransUnion. Each one generates a credit report for you, which means you’ll have to view all three credit reports when you go to
  • Lenders aren’t required to send updates on your financial activity to all three of the CRAs. Therefore, your credit reports can differ from one another, which is one reason it’s so important to check all three.
  • You have a right to receive your credit reports for free once per year, though there are tools that enable you to stay up-to-date on your credit reports and credit scores each month.
  • Your credit reports and your credit scores are two different things, although the information on your credit reports factors into your scores. Don’t expect to see your credit scores on your credit reports, though, as they are different products created by different companies.

Now that you know these basic facts, the next step is to understand what you’re looking for when you obtain your credit reports. As mentioned above, the information on your credit reports factors into your credit scores. That means your credit reports illustrate to you what state your credit is in, giving you the ability to start improving your credit before you even know your scores.

2. Review Your Credit Reports for Red Flags

Once you have your credit reports, scan them for red flags. Here are a few things to look out for that could end up hurting your credit:

  • Mistakes in your personal information such as a misspelling of your name or an incorrect social security number. These mistakes could lead to someone else’s credit activity showing up on your reports.
  • Other errors such as accounts that you didn’t open or incorrect details on the accounts you did authorize. Seeing accounts you didn’t open could also be an indication of fraudulent activity.
  • Collections accounts or late payment activity. Any indication that you have an account that is past-due means your credit score took a hit. The sooner you can bring those accounts current or negotiate a repayment deal on the collections accounts, the better off your credit will be.
  • High revolving debt balances. If you have a credit card or line of credit that is close to being maxed out (or even halfway there) then your credit will take a hit. If you want to improve your credit, focus on getting those balances down to 30 percent of the limits or less. If you have multiple lines of credit, add up all the credit limits and all the balances to see your total credit utilization.

If you don’t spot any of these red flags in your credit report, continue to step four. If you find any errors on your credit report, continue to step three. And if you don’t have any errors, but you do have some of the other red flags, pay special attention to step seven.

3. Dispute Errors You Find on Your Credit Reports

Finding errors on one or more of your credit reports can be disconcerting, to say the least. The good news is that you can get them fixed. Here’s how to dispute errors on your credit reports:

  • Make sure you’re aware of which CRA is showing the error. For example, if there’s an error on your Equifax report and you dispute it with Experian, then the dispute won’t work. It’s important to remember that the CRAs are different companies with different credit reports. You must dispute the error with the CRA who generated that report.
  • If you’re disputing by mail, circle the error and write a dispute letter explaining why it’s an error and what you wish to be done about it. If you’re disputing online via the appropriate CRA, then follow the process their online platform guides you through to complete the dispute.
  • Once you’ve initialized the dispute, the CRA typically has 30 days (21 in Maine) to investigate your dispute. This includes reaching out to the data furnisher that provided the information to the CRA. The data furnisher must conduct their own investigation and respond to the CRA within that same period of time.

And if you don’t want to deal with the dispute process on your own, you can use tools like Upturn Credit to do it for you. You would simply initiate the dispute through the tool and let it do the rest.

FREE Tool: Are there errors on your credit report? Find out and dispute them!

4. Obtain One of Your Credit Scores

Once you know your credit reports are an accurate representation of your financial history, the next step is to find out the three-digit number that dictates whether your credit is good or bad (or one of the stages in between). In other words, it’s time to find your credit score.

However, you don’t have just one credit score — no one does. In fact, you have many credit scores. Here’s why:

  • There are two companies that have created the most popular credit scores on the market: FICO® and VantageScore®. Right off the bat that gives you at least two credit scores.
  • Both companies have multiple versions of their credit scores. FICO® is up to their ninth model, with each model comprising of different versions that different types of lenders can use. (For example, there’s a version for credit cards, one for auto loans, and one for mortgages.) VantageScore® is up to their fourth model. And, when new models are released, lenders can keep using the old ones if they’d like. See how quickly the number of your credit scores goes up?
  • There’s also something called an “educational credit score,” which is the one you will most often see when you sign up for a tool to show you one of your credit scores. This is not necessarily the same score lenders see.

All in all, keep in mind the fact that your multiple credit scores can vary from each other, and that the number you see isn’t always the one your lenders will see. That’s okay, however, as it still gives you an idea of where you stand.

FREE Tool: Get a free credit score here and find out if there are any errors on your credit report.

5. Make Note of the Credit Score Range You Fall Into

As mentioned above, the credit score you see when you obtain one of your credit scores isn’t necessarily the same one lenders will see. Because of that, you might find it more helpful to pay attention to the range that your credit score falls into. That’s because there’s a good chance your other credit scores will fall into (or at least close) to that range.

At this point, it’s important to remember that the credit score range you fall into doesn’t just impact whether or not you’ll be approved for credit. It also impacts the interest rate you might pay. The lower your credit score and range, the lower the chance you’ll be approved — or the higher the chance you’ll be approved at a more expensive interest rate.

Here’s a chart from myFICO that highlights the difference a credit score can make:

Image by myFICO

As you can see here, the interest that corresponds to the lower credit score is significantly higher, leading to a higher monthly payment and a larger amount of money paid in interest overall (almost $100,000 more, in fact). The higher credit score, on the other hand, gets approved at a lower rate and ends up with a lower monthly payment and that means less money paid in interest overall. (This is an example for educational purposes only. Individual experiences may vary.)

6. Review the Factors Affecting Your Scores

Reviewing your credit reports should have given you a pretty good idea of what your financial history looks like to prospective lenders, and seeing one of your scores and the range it falls into should have given you a good idea of where you stand. But what about the specific things that play into your scores?

This part is deceptively simple. Some might have you believe that many complex and varying factors determine your credit scores. And, although different credit scoring models might weigh the factors differently, the whole thing is still pretty straightforward. A lender wants to know whether or not you’ll pay your monthly bill, and they use your financial history and current obligations to try to predict if you can and will.

Here are the factors that play into your FICO® credit scores:

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And here are the factors that play into your VantageScore® credit scores:

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Put even more simply, here’s what prospective lenders want to know about you:

  • Will you pay your bills? Multiple accounts in collections or several late payments might make it seem that you won’t, or that you can’t.
  • Can you afford this loan or line of credit? A large credit utilization (how much you owe in revolving debt compared to how much credit you have available to use) might make it seem as though you’re close to being financially overloaded.
  • Do you know how to manage credit? A lack of credit history makes it hard to know one way or another.

If you fear your current state of credit might not be giving a flattering image to prospective lenders, then you can turn the ship around. That’s what the next step will show you how to do.

7. Make a Credit-Improvement Action Plan

The scary thing about not having good credit is the feeling that you might never have good credit. But the truth is that credit can always be improved upon, and it might not take as long as you think. All you have to do is make a plan. Here are a few things to start with:

  • Pay all of your bills on time, from cell phone bills to credit card bills and everything in between. You can even set up automatic payments if you’re afraid you might forget about due dates. Remember, payment history is the most important factor of your credit score, so this step alone is a huge step in building good credit.
  • Deal with collections accounts swiftly. Here are some tips on dealing with debt collectors and resolving delinquent accounts.
  • Start paying down revolving debt. Many experts suggest that the ideal credit utilization rate is 30 percent or lower (the lower the better). Paying down debt is certainly easier said than done, but there are tools that can help. For example, balance transfer credit cards can help you pay off high-interest credit card debt so you can pay less on interest and get those balances down faster (as long as you remember the interest rate will go up after the introductory period). Another thing you can do is try debt payoff strategies such as the debt avalanche or debt snowball if you have multiple types of debt to pay off. These strategies can help you make the most of your monthly payments.
  • Fix mistakes on your credit reports, as explained in step three above.
  • Keep old accounts with a positive history open. This is the easiest thing you can do to build good credit. Simply keep accounts open, as the longer they’re open, the longer your credit history. It might seem prudent to close accounts you’re not using anymore, but letting these accounts stay on your credit only helps you.

Once you’ve established these habits, make sure you keep them. Building good credit isn’t something you should only do in the months and years leading up to the preparation for a loan, it’s something you should do for a lifetime. After all, you never know when the need for credit might come up. The more you maintain a good credit score once you’ve built one, the more credit opportunities you’ll have available to you should you ever need them.

Don’t Forget to Keep Your Credit Secure

You’re almost at the finish line of understanding how to fix your credit on your own. The only thing left to do is make sure your credit is secure. In other words, it’s not just important to fix your credit; it’s important to protect your identity.

In these days of data breaches and identity theft, the importance of protecting your credit and your identity is paramount. There are small and easy things you can do to this effect, such as setting strong passwords on all websites you use, and big things you can do, such as freezing your credit if you fear your identity has been exposed in a breach.

Between these large and small steps lies credit monitoring. Obtaining your credit reports as outlined in step one above is a great start, but you can also sign up for websites and tools that alert you to changes in your credit reports. Many of the tools linked in step four that can help you get one of your credit scores for free also offer this type of monitoring.

Spotting changes like these is a good first step to catching identity theft. Setting up spending alerts on your credit cards and your debit cards is a good first step to catching fraudulent activity on those accounts. In short, the sooner you’re made aware of suspicious behavior, the sooner you can take action to shore up your credit and ensure that the behavior doesn’t continue.

FREE TOOL: Are mistakes on your credit report hurting your credit score? Find out here.

Remember, you’ll be going through the next several months and possibly years to get your credit mortgage-ready, auto-loan ready, or ready for whatever large purchase you have in mind. Make sure you maintain identity security at the same time, so you don’t lose opportunities due to theft.

Ready to take the next step in repairing your credit? Read this.