Getting Your Credit Back in Order

If your credit score has taken the slings and arrows of late payments, missed payments or even a charge-off, you can bring it back up from the depths.
man restricted by credit rating
By Susan Barnes
Updated on: November 14th, 2022

man restricted by credit ratingIf your credit score has taken the slings and arrows of late payments, missed payments or even a charge-off, you can bring it back from the depths of the land of Fair or Poor. Once you have made the decision to get your credit life back in order you can follow these few steps to give your credit a boost. No matter what advice we give, you have to be diligent in keeping up with your payments and paying down the  debt to get your credit back to Good, Very Good or Excellent.

First thing to do is get a full copy of your credit report and start dissecting the negative items and any errors. Find the biggest problem and deal with them first, then work down the list.

When reviewing the report look for how many late payments you have. If you only have one or two, then a good-will deletion is the first step in the right direction. Call the issuing creditor and ask about a good-will deletion, doing this sooner than later will also help your case. Now, if you are habitually late, then this option might not be the one to help you.

Another option is to lower the outstanding debt.  Credit scores are determined by credit utilization, which is how much available credit is being used and how much is remaining. If the credit utilization is above 30% the score is affected negatively. Getting the percentage of use down to 20% or even better 10% will have a positive outcome. One way is to pay down the debt with a personal loan or a debt consolidation loan. Taking this type of loan helps two-fold. First, it transfers the credit card debt, which is considered a revolving debt over to an installment loan. FICO looks at revolving credit differently than an installment loan, which will help your score. Secondly, the loan you take will be at a lower percentage than your credit cards, which will help you pay off the loan quicker.

As we explained before, credit utilization is a key factor when calculating a FICO score, it accounts for 30% of the score. If you have more than one credit card then consider using the balance transfer option. This might be the best course of action if you can manage the cards accordingly. Move some of the debt around so you will be using a lower amount on each card, this can bring your score up. This is not a long-term solution and if the cards are already at their limit, this won’t work either.

If a family member has good credit, you might want to consider asking them to be an authorized user on the account. If the card-issuer is accommodating, then the good-credit history will be calculated in your score. Not all lenders use the FICO score as their main scoring rubric, so keep this in mind when using this method.

If you have gotten to the point where your credit card has been sent to a collection agency, there is still hope. If you call the collection agency, make them an offer to pay the bill in exchange for them removing the item off your credit. Make sure to get this arrangement in writing prior to paying the bill.

Things to Do

Pay Your Bills on Time
Keep Your Balances Low
Pay Off Your Bills
Be Credit Smart

Things Not to Do

Open New Cards
Max Out Cards
Make Late Payments
Miss Payments

 If you have found a tip that helps boost your credit rating, please comment below.