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There are a lot of credit repair companies that swear they can improve your credit score immediately — that doesn't mean their solution is real or legal.
Nothing about fixing credit is instant. But there are proven, legal steps, that will speed up the process of improving your credit score in only a few months. Learn how you can fix your credit score in this slideshow.
Learn how to repair your credit step by step.
Hard financial times can lead to late payments on your credit accounts. When you miss a payment by a month, your account is considered delinquent. Then your creditor or lender reports your delinquency to the three major credit bureaus — Equifax, TransUnion and Experian — which looks bad on your credit report.
If you have these negative items on your report, you can try to negotiate with your creditors and lenders on the delinquent accounts to fix your mistakes through a process called "re-aging."
Call the creditors or lenders, and you may be able to work out a repayment schedule. Do this in exchange for them to "re-age" your account to remove the late payment or negative statuses. Removing all delinquent payments from your credit report will improve your credit score.
Not all negative items on your credit report are accurate. Errors reported to the three major credit bureaus can weigh down your credit score by a significant amount — all for a mistake you didn't make. You can dispute these errors to have them removed through what's called "credit repair."
There are legitimate credit repair companies you can hire to do this service for you. Or you can purchase do-it-yourself credit repair software to guide you through the process. If you're really savvy, you can search for a free guide online to show you how to go about disputing those errors on your credit report.
Successful disputes will improve your credit within a month. Credit bureaus have 30 days to verify the information in your report, or they have to erase it.
One of the more common-sense ways to improve your credit score is to make all your payments on time. There are five pieces to the credit score pie, and not all are equal.
Payment history makes up the biggest chunk — 35 percent of your score. Missing a payment will show the greatest drop in your score. But every payment made on time will create a positive mark on your credit report. With enough of these payments, you can combat missing payments that created negative items in the past.
No matter what people may tell you, there is never a good reason to carry over credit card debt from month to month. You're best off attempting to zero out your credit card balances.
The amount of debt that you owe makes up the second biggest piece of your credit score — 30 percent. You want to keep your credit utilization ratio below 10 percent, which means if your credit card has a limit of $3,000, you want to keep your balance down to $300, or below. Since this is such a big chunk, keeping your balances low will have a significant effect on your overall score.
The third-biggest piece of your credit score is your length of credit history, which makes up 15 percent of your score. This determines how new you are to credit, and how trustworthy you are to lend money to.
You don't want to close older accounts for this reason. Keeping your oldest credit accounts open shows an older "credit age," which will look better on your score. The best route for you is to keep your older accounts open while working with your creditor to keep the account in good standing.
This tip carries over from the previous one of keeping a good credit history. You want to have as many credit accounts open in good standing as possible. But you don't want to charge up more than you can comfortably afford to pay back on time.
The trick here is to keep small, reasonable amounts of debt that you can manage. To do this, you can open a secured credit card, which is similar to a debit card in the sense that you deposit the amount of money you're able to charge. But unlike a debit card, the three major credit bureaus report charges from a secured credit card, which show on your credit report.
You can also take out a small personal loan to renovate your home, or purchase new appliances or furniture with an in-store credit line. But as with all other lines of credit — make your payments on time.
Going back to the legal ways to fix your credit — there are faster ways to fix your credit. Fraudulent "credit repair" companies advertise ways to "instantly fix your credit." And you want to avoid them at all costs.
The truth is, there is only one way to instantly fix your credit, and that's by fabricating a new credit identity. It's illegal, and if you come across one of these companies offering to "help" you, report them to the Federal Trade Commission. These fraudulent companies will charge you a ridiculous amount of money to illegally set you up with a new credit profile under a fake Social Security number, and then they'll disappear off the face of the earth.
You may not even notice you were swindled until federal agents come knocking on your door accusing you of "criminally-liable identity fraud." Yikes. It may sound crazy, but you can wind up in jail by taking advice from the wrong people.
The only legitimate ways to improve your credit take time. But if you follow these steps, you'll be on the quickest and safest route to a better credit score.
Published by Debt.com, LLC Mobile users may also access the AMP Version: 7 Secrets to Fixing Your Credit Faster - AMP.