How to repair your credit

Repairing your credit can be done on your own with a little patience and grit. Here’s how:

Check your credit score and credit reports.

There are numerous ways to check your credit score for free, and checking your credit score doesn’t hurt it.
One way to get your credit score is by signing up for a free LendingTree account. Another way to get your free score is by creating an account directly with the credit bureau Experian. In addition, Experian offers a service called Experian Boost, which allows payments that wouldn’t normally affect your credit score — such as utilities, eligible streaming services and your phone bill — to build positive credit history on your Experian report.

As far as credit reports, you’re entitled to a free report every year from each of the three bureaus via annualcreditreport.com. And during the coronavirus pandemic, the bureaus have been offering free weekly reports.

If you spot something inaccurate on your credit report, you can file a dispute to get it removed.

If you spot something inaccurate on your credit report, you can file a dispute to get it removed.

Get a credit card and use it responsibly.

Used poorly, a credit card can bury you in debt and drain your bank account due to interest charges. But used responsibly, it can be a powerful tool for showing lenders you’re trustworthy. Here’s how to do it right:

Spend only what you can afford to pay off in full. This will accomplish two things. First, it will ensure you don’t pile up credit card debt. And second, limiting how much you spend on your credit card is good for what’s known as the utilization ratio. A good rule of thumb is to spend no more than 30% of your credit limit — for example, spend no more than $60 at any time on a card with a $200 credit limit.

Use your card for small, recurring monthly charges. Issuers want to see you’re using your card, not letting it stay dormant. If you’re worried having the card in your wallet might tempt you to overspend, consider using it for a recurring monthly payment, like a HBO Max or Spotify subscription. Then, set up autopay so you never miss a payment.

Make sure to pay on time and in full every month. On-time payments are typically the biggest factor impacting your credit score. Payment history makes up 35% of your FICO Score and 41% of your VantageScore. We always recommend paying in full so as to avoid interest charges, but even if you can’t pay in full, you should make at least the minimum payment due so you’re not reported as late to the credit bureaus.

Avoid applying for too much new credit

Getting a credit card that reports to the bureaus can help improve your credit score. But once you’ve obtained it, you should avoid applying for new credit too often, because doing so hurts your score the following ways:

Putting a hard inquiry on your credit report. Each time you apply for a credit card, a hard inquiry will typically appear on your credit report. This can knock your credit score down by a few points and stay on your credit report for two years.

Reducing the average age of your accounts. Length of credit history makes up 15% of your FICO Score, and average age of accounts is part of this. Each time you open a new account, that average age takes a dip.