The Ultimate Guide to Fixing Bad Credit

So you’ve got bad credit. We get it — it’s absolutely no fun to have that stuff hanging over your head. It’s a huge emotional and financial drain on you and your family, it’s not something you’d wish on anyone else.

But — there is some good news. Firstly, let’s get one thing out of the way — bad credit is no reflection of you as a person. Debt happens for a number of reasons, ranging from unexpected medical expenses, to just a few months of overly enthusiastic shopping. You are not alone in your debt either — the average American has debts of $90,460.

Just because you have a bad credit score, it doesn’t mean you have to live with any sort of shame — you can fix it! Just like bad debt happens for a reason, good credit scores also happen for a reason, so let’s talk about that.

We’re going to go over what makes a bad credit score, how to turn it into a good credit score, and along the way, you’ll learn how to dig your way out towards financial freedom.

We want to be honest with you, though — yes, it takes work, and yes, it takes effort. There is no magic bullet that will make your bad credit go away. There are, however, a few simple but very effective things you can do to unchain yourself from your debt and live a happier life filled with freedom and financial security.

In this ultimate guide, we’re going to cover everything you need to know about your credit score, how you can improve your credit score, and how your life can improve once you follow the steps in this guide.

What is your credit score?

Your credit score is a measure of your financial reliability. At least in the eyes of banks and other financial institutions, it reflects how well you manage your finances and whether or not you make timely payments on loans and bills.

That’s because lenders use credit scores to decide who to lend to and at what interest rates; if it looks like you’ll have trouble paying back their loans, then they’re less likely to approve lending requests from you in the future.

If your credit score isn’t good — banks and other lenders believe that’s a sign that you might be having trouble managing money, which can cause problems in other areas of life like job hunting, owning a home, getting insurance coverage for yourself and your family members.

So if you’re looking to apply for a loan — or you’re concerned that your credit score might be holding you back from potentially valuable opportunities, then working to improve your credit score is something you should consider.

What is a good credit score?

Credit scores depend on a lot of things, which we’ll cover later. However, when it comes to what banks consider good and bad is pretty clear cut. Credit scores generally fall into four categories: bad, fair, good, and excellent.

A score of 300 is the absolute lowest you can go, and 850 is the absolute highest. The average American has a credit score of 698, which is in the good category. Keep in mind though, if that is the average score, that means half of Americans have a credit score below that — so if you have bad credit, you are not alone.

Generally speaking, you can improve your credit score no matter your rating, but it does tend to be harder to turn a good score into an excellent score.

If you’d like to know more about what banks consider when it comes to credit scores, you can read our article What Do Banks Consider a Good Credit Score?

Using a Credit Repair Company

There’s good news! You might not know this, but some of your so-called bad debt might not actually be bad debt after all. Some of your debt might actually be an error, due to the fact you actually paid it, or it was just bad reporting in the first place.

This is where a credit repair company comes in — they can go through your financial records and help you improve your credit score by finding the “false debt”, and negotiating on your behalf on how to pay off genuine debt.

Okay, let’s get started on everything you need to know about using a credit repair company to repair your credit score. In this section we are going to cover:

What Is a Credit Repair Company?

Credit repair companies are organizations that claim to be able to remove negative items from your credit report. These items might include false reporting of late payments, foreclosures, debts, and judgments. If you have any of these types of debts on your credit report, there are ways in which a credit repair company can help remove them so the debt won’t affect your credit score. Good stuff right?

If you have a bad credit score and need help repairing it, there are ways to do so with the help of a credit repair company. These companies can help remove negative information from your credit report to improve your credit score. With this in mind, there are some important questions to ask before deciding to work with a company that will basically “clean up” your credit report.

Credit repair companies are usually used by consumers who have debts on their credit report but don’t know how to remove them. Many times, these companies offer the service of disputing negative items with the three major credit bureaus; Experian, TransUnion, and Equifax.

While some consumers find that they are able to process their own credit repair, most don’t have the time, patience, or knowledge of how to do so. In the end, most people find that it is much easier to work with a credit repair company to achieve their goals.

Many people use a credit repair company because their goal is to improve their credit score as quickly as possible. For example, a consumer may want to purchase a home but feels uncomfortable doing it with the credit score that they currently have. By working with an experienced credit repair company, consumers are able to improve their bad credit score much faster and more conveniently than having to do all of the hard work themselves.

How Much Does a Credit Repair Company Cost?

Honestly, repairing your credit is actually something a lot of people can do themselves, so in that sense, it can cost you nothing. However, as we mentioned earlier, the whole process of going through big paper trails, contacting credit agencies, and trying to negotiate new terms isn’t exactly something we’d recommend for fun.

So when it comes to repairing your credit score, most people find that paying for a professional credit repair company is a much better option. When you do hire a credit repair company, you can expect to pay between $30 and $100 per month, and the exact number will depend on what you need.

For example, if you have $20,000 in credit card debt and bankruptcy that’s preventing you from getting a good rate for a mortgage, then that’s going to cost a lot more than having just a couple hundred dollars of medical debt.

One thing to note is that by law, all credit repair companies are required to be completely upfront with their costs. That means if they don’t show you exactly what they are offering, and what they will charge, you should stay away and find a reputable credit repair agency.

What does the credit repair process look like with a credit repair company?

The credit repair process means hours of tweaking and updating your data for curating your credit information. It’s not a fun or quick process, so that’s why people hire credit repair companies to do the heavy lifting. Individual credit repair companies might approach things slightly differently, but the process remains mostly the same.

The very first step of the process is the credit repair company seeking your credit score and credit history on your behalf. They’ll generally contact each of the three credit bureaus — Experian, Transunion, and Equifax. The company will then use this data to determine what’s wrong with your profile and how they can fix it. They’ll let you know if there are any errors that need to be changed, whether items are missing, or if some debts should be paid off before requesting them to be removed.

The first step of the process is having a credit repair company contact each of the three major credit bureaus on your behalf. This is called a “609 letter”, and it’s part of your rights as part of the Fair Credit Reporting Act (FCRA). This letter requests all of your credit information, including who has accessed your credit file, for example, employers and lenders.

The company needs this data so they can determine what needs to be done in order to repair your credit score. If there are any errors that need to be updated, items that are missing, or debts that should be removed, the company will let you know about them.

The next step is for your credit repair company to write a formal letter of correspondence instructing the credit bureaus to investigate everything your credit repair agency is claiming. That means if they’re asking for a debt to be removed, the credit bureaus will investigate and attempt to verify that this debt belongs to you.

Once the credit bureaus have gone through all of your credit paperwork, they will send you back an updated version of your credit report. Your credit repair agency will then help you go through all of the items you no longer want on your credit report.

The credit bureaus should be working on a time period of about 30 to 150 days to get back to you on these disputes. This is called the “timely response” threshold, and it ensures that credit bureaus don’t ignore you or delay your requests.

All things going well, you will have some of your debt removed, which will, in turn, improve your credit score. The results will vary case by case, but at the very least, you will have the most accurate version of your credit report possible, based on the revisions you have made.

The process isn’t quite finished here though, or at least it shouldn’t be. To keep on top of your credit score, you should request a free copy of your credit report from each of the three credit bureaus every four months. The Fair Credit Reporting Act ensures that we can do this without getting charged.

By keeping regular tabs on your credit report, you will be able to monitor new debts as they come up, and dispute them if you think they are a mistake. After doing this regularly for a year or so, you’ll be in the great habit of finally being in control of your credit!

How long does the credit repair process take?

The overall credit repair process will take time — anywhere from three to six months, depending on how bad your credit history is. There are a number of factors that will determine how quickly your credit will be repaired.

The main factor is based on how long your history is, and to what degree it’s stuffed with negative items like bankruptcies, judgments, collections, etc. Basically, the more bad stuff you have on your credit history, the longer it’s going to take.

What we’re trying to say is that the only way to find out how long it will take for your credit history to be repaired is to contact a credit repair company and let them examine your case. They’ll then provide you with a free estimate of how long it’s going to take, and then they can put together a strategy on how to go about repairing your broken credit.

While it’s tempting to want all of this to happen overnight, it will be a reasonably long process that will take patience. The good news is, once the whole process is over, your financial life will be in much better shape, and you’ll also have the knowledge to allow you to keep it that way in the future.

n conclusion, if you have a bad credit score, you are not alone — we promise. There are millions of people who have had their credit history broken by errors, debt, and other financial mistakes that they made in the past. However, you can fix your credit with a qualified credit repair company to repair your broken credit score, so it will be easier to get approved for loans or find an employer when you need one.