The amount of time and effort you’ll spend on your credit repair efforts can vary based on the severity of your situation, but whether you’re new to credit repair or want to improve upon what you’ve already done, it’s important to avoid common mistakes to get the best results possible. If you want your credit rating back in good standing, here are some of the most common credit repair mistakes to avoid.
1:Not being persistent
When you first begin your credit repair, it can seem like a long process. It’s easy to get frustrated and give up. Keep in mind that when your goal is to have a clean financial slate, it will take time. The good news is that once your debts are paid off, they stay gone. If you give up now, they will always be there waiting for you when you decide to try again tomorrow!
Not having a plan: Writing down all of your debt information on paper helps make things more manageable. Keeping track of which creditors you have already contacted is also crucial because each creditor has its own set of rules regarding communication and payment deadlines. Figuring out which strategy will work best with each creditor allows you to ensure that all of your bases are covered.
2:Thinking you can do it on your own
Credit repair can seem like a quick and easy fix. After all, all you have to do is fix a few errors on your credit report, right? Unfortunately, it’s not that simple. It takes time and money—and if you’re going at it alone, there’s no guarantee you won’t break any rules. If you want to correct your credit, find a reputable company to work with; these agencies are more likely than DIYers are to know what they’re doing and stick within legal bounds. There is no doubt you’ll come out better off in terms of cost and convenience.
3:Not having a plan
Your credit isn’t likely your only financial problem, so don’t plan to tackle it all at once. Instead, create a plan of attack and stick with it. For example, set up automatic payments on any delinquent bills you can afford and then work on paying off any other debts before setting up more automatic payments. This will prevent you from spreading yourself too thin and losing focus.
Not creating an organized system: This is just another way of saying that organization is key to repairing bad credit. From sorting out documents (those piles aren’t going anywhere) to having lists of creditors, accounts, and due dates handy, staying organized makes it easier for you to work toward your goals.
4:Making a payment late on purpose
Late payments are a major factor in credit scores, so it can seem smart to make payments late on purpose if you’re trying to repair your credit. However, making payment even one day late is an automatic ding on your credit score and isn’t worth a possible hit of up to 10 points. If you can do it responsibly, make all payments on time! Delinquent accounts have similar effects: having just one delinquent account associated with your name could be enough for lenders to assume you don’t pay your bills and cause them not to work with you at all. With credit as tight as it is today, why risk being denied when you can keep every account in good standing?
5:Failing to pay bills for a long time
There’s no quick and easy way around late payments. You need to start paying your bills on time, every time. The longer you let bills go unpaid, the more they will affect your score (5 points per 30 days of late payment). Set up automatic bill pay through your bank, or use a service, if it will make it easier for you to remember and set them up right away. Or consider paperless billing to cut down on mail clutter—and forget about paying bills by phone or online: these are not considered timely payments, which can hurt your score.
Failing to dispute mistakes promptly: If there is an error in one of your credit reports, get in touch with that bureau and make sure it’s corrected as soon as possible. Missing information is one common mistake; incorrect information is another.
6:Keeping bad credit habits going
The biggest mistake you can make when attempting to repair your credit is not changing your spending habits. If you’re running up high balances on multiple credit cards, get serious about putting a stop to it by making one card your last resort. Pay off that card in full each month and you’ll see big changes in your score (for the better!) within just a few months. You may also consider working with a credit counselor or financial planner who can help with budgeting and debt consolidation options.
7:Doing it all by yourself, instead of hiring help
While you may have more control over what happens when you manage your credit repair, there’s no denying that hiring a credit repair company can make things easier. Hiring a credit repair firm will allow you to focus on other parts of your life while they work behind the scenes on your behalf. If you’re going it alone, be sure that you’re doing everything necessary to maximize your credit score. Credit scoring is a complex game and there are certain aspects of it that we all need outside help for. Don’t miss out on getting full advantage of everything your hard work can get for you.
8: Trying too hard to get more credit when you don’t need it yet
You probably know that having more available credit can help your score, so it’s tempting to take out a loan or open up a new line of credit when you don’t need it. Before you do that, though, check your credit reports. You might find something suspicious, like an error or over-the-limit charge on one of your accounts. The last thing you want is for that account and its mistakes—accidental or otherwise—to affect your credit score while you’re working so hard to improve it.
So be smart: If opening a new line of credit would push you over your limit on other accounts, forget about it until those other accounts are in tip-top shape.
9: Getting mad at yourself when you make mistakes
If you’re learning how to repair your credit for the first time, then there’s a good chance you’ll make some mistakes. It happens. No one is perfect and even those who have done it dozens of times before still find themselves making mistakes now and again. When it comes to credit repair, don’t let yourself get down on yourself when something goes wrong or when you make a mistake—it won’t help you learn how to fix your credit faster. Instead, embrace each error as an opportunity for growth and move on quickly so that nothing gets in your way of getting out of debt faster.
10: Failing to keep a good attitude about things and accept your situation
If you’re going through a rough patch financially and your credit is damaged, it’s easy to feel a deep frustration. You may feel like you didn’t do anything wrong but just ended up in an unlucky situation, or maybe you made some mistakes that contributed to your bad credit. Don’t let yourself fall into despair; if your hope disappears, so will your ability to deal with things and find solutions. Remember that help is available—from friends, family members, and even charities—and use it. The best way to get back on track financially is by maintaining a good attitude toward things and having confidence in yourself as well as faith in humanity; don’t lose those now just because of bad credit.