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How to Fix Your Credit for Free

Learn how to fix your credit for free to assess if you can do it on your own or need to hire professional help.

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Pop Quiz

What percentage of consumer credit reports contain an error that would decrease a person’s credit score?

a) 1 in 3

b) 1 in 4

c) 1 in 5

d) 1 in 10

Reveal Answer

Roughly 25% of credit reports contain an error that would decrease that consumer’s credit score. One in 20 reports have an issue that would hurt the consumer’s credit by 25 points or more.

b) 1 in 4

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So, you drove your credit score into a ditch. It happens. Luckily, almost nothing in consumer credit in the U.S. lasts forever. You can fall behind on your payments, declare bankruptcy and still recover to achieve a good credit score. Even better, if you take all the actions below yourself, you can do it for free (mostly).

Step 1: Get your government-mandated free credit reports

Forget all the third-party sites that claim to give you a free report or charge you $1 to get started. By law, you can download your credit report directly from the credit bureaus once every twelve months. The government-run website is

All you need to do is answer a few security questions and you can access and download each report for free. Realize, you have three reports – one from each credit bureau. If you’ve never reviewed your reports, it’s a good idea to download all three to go through the process below.

Step 2: Review your reports to check for mistakes and errors

First, read through your reports, taking special note of any negative items that can decrease your score. You also want to check for any other errors that could lead to a lower score for you. You want to check for:

  1. Late payments you made on time
  2. Outdated account statuses
  3. Collection accounts that don’t belong to you
  4. Duplicate accounts, such as two listings for your mortgage

Some of these errors may be legitimate. If you legitimately earned a penalty, there is little you can do to legally remove the negative item from your credit report. However, you can dispute any errors or mistakes to remove them from your report.

Step 3: Dispute all the mistakes and errors you find

This is known as credit repair. You contact the credit bureau who issued the credit report and ask them to verify the incorrect item. If they can’t verify that the item is correct, by law they must remove it.

  1. To dispute errors, you can send letters via registered mail return receipt requested or through each bureau’s online portal.
  2. You tell them what the mistake is and provide copies of documentation that shows the error.
  3. They contact the original creditor to ask them to verify the information.
  4. If the creditor can’t verify the item within 30 days, the bureau must remove the item; they send a free copy of your credit report so you can verify the removal.

Just cleaning up mistaken information in your credit report can increase your score. This is especially true if you recently experienced a period of financial distress, where you had missed payments or collections.

This is the sum total of what a credit repair company does. So, anything they can do you can do for free. More on why you would pay a service to do this for you further below.

Step 5: Now take note of the negative stuff you can’t argue away

Now for those negative items that are legit. Look at your report to see when you incurred each penalty, then start counting to see when they expire. Negative information in your report can only stick around a limited amount of time. Things like missed payments, collection accounts and even Chapter 13 bankruptcy on stay on your report for 7 years. Foreclosure and Chapter 7 bankruptcy stay for 10 years and tax liens are typically gone within 15 years.

Essentially, you can wait out these penalties for your credit to recover. As long as you don’t make any new mistakes that cause new penalties, you score will increase gradually. Each time a penalty drops off, it gives you a bump. Then, as you wait for penalties to expire, you can play the system to your advantage using the tips below.

Step 6: Know how your score is calculated, so you can game the system

Here is how the average credit score formula breaks down:

  1. 30% payment history
  2. 30% credit utilization ratio
  3. 15% length of credit use
  4. 15% number of new credit applications
  5. 10% types of credit in use

Every payment you make on time counts as a positive mark on your credit. The more positive remarks you accumulate now, the more they can offset mistakes in the past. This makes paying your bills on time one of the best things you can do to build credit.

The other major factor is credit utilization. This is your current total credit card balance divided by your total available credit line. If you have a $10,000 combined credit limit and $2,500 in balances, your credit utilization ratio is 25%.

Paying off credit card debt in large chunks improves your credit score quickly. So, if you want to boost your credit, stop charging and pay off debt. The combination of on-time payments and lower debt can go a long way to fixing your credit.

Should I fix my credit on my own or hire someone?

Assess your situation to see if you need professional credit repairAs stated above, there is nothing a company can legally do to fix your credit that you can’t do yourself. If you repair your own credit, then at most you may incur some charges for mailing letters; the entirety of the process outside of that is free.

So, why are there credit repair companies if you can do it on your own? The same reason that there are Realtors® even though you can sell a house for-sale-by-owner. The same reason you hire a financial planner to choose mutual funds for your retirement instead of picking them yourself. It’s easier to pay someone else to do it, and in some cases, they can be more effective.

By laws, you can hire a credit repair company to make disputes on your behalf. They must have a state-licensed attorney on staff who is authorized to make credit disputes with your authorization. That’s the only form of legal credit repair.

If you hire a company, they typically will review your reports and flag issues that you need to review. Then they make the disputes for the errors for you. They contact the credit bureaus and handle the back and forth. Credit repair companies have experience making effective disputes; they know how to ask for verification in a way that increases your chances for success.

However, once you do this dispute work, there’s nothing more the credit repair company can do for you. They’ll give you tips the like the ones above to help you build credit, but you’re pretty much on your own. Then it just takes time and positive actions to continue building a good score.

5 signals your credit repair company is a scam

#1: They guarantee a certain point improvement in your credit score

If a credit repair service guarantees that they can improve your score by 100 points, it’s bogus. Your score depends on the mistakes you make, the positive actions you can, and other factors that very greatly from one consumer to the next.

If a person has a 500 FICO score and has never disputed any mistakes, then there’s a good chance their score can improve by 100 points with credit repair. However, if someone has a 760 FICO and goes through credit repair, their score may not improve as much. If you have nothing to dispute, there’s no room for improvement.

#2: They tell you to dispute everything

Some companies advise that you should simply dispute everything in your credit report. The idea is that even some correction information can’t be verified. So, you dispute everything and see what you can remove.

This isn’t illegal, but you basically become the consumer who cried wolf to the credit bureaus. If you ever have a legitimate dispute, it may get rejected because of all the illegitimate requests around it.

#3: They don’t have state-licensed attorneys on staff

If the staff is only customer service reps and sale people, the credit repair service is not legit. The Credit Repair Organizations Act expressly states that ONLY a state-licensed attorney can act on your behalf WITH your authorization. Even a wide or husband can’t dispute their spouse’s mistakes. So, unless you see attorneys licensed to practice credit disputes in your states, don’t hire that company.

#4: They work everywhere

This one isn’t always a sure sign of a scam. There are a few national credit repair companies that have attorneys licensed work in every state on staff. These are usually referral networks that direct you to any attorney or law office in the state where you reside.

Fact: Credit repair is highly regulated in many states, beyond what federal law provides.

If you use national credit repair services, make sure they use words like “state-licensed” and “attorney” when describing their process. If not, move on and find a different company.

#5: They advise you to pretend to be someone else

If a company ever advises you to get a new Social Security number, it’s illegal; you could face criminal charges if you follow their advice! The same is true of getting an Employer Identification Number (EIN) to start a new credit profile as a business.

Trying to escape your credit record by making a new one is against the law. You commit a crime and could face criminal charges for fraud. Don’t ever do this and report the company to the CFPB or FTC if they tell you to do this.

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Article last modified on March 7, 2018. Published by, LLC . Mobile users may also access the AMP Version: How to Fix Your Credit for Free - AMP.