This very helpful article reveals a lot about credit restoration and as many as 15 very helpful tips to really help you.

 

Importance of Credit Restoration

If a group of kids are playing baseball and there is a broken window, then generally the kid holding the bat is the one to blame.

This may be true, or it may not be true.

Often, in life, the same assumptions are held in that the individual who is blamed for a specific action is accused because of circumstantial evidence.


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For example, if something that is missing is found in an individual’s possession, the quick assumption is that they are responsible for that item being missing.

When in fact it could have been planted, maybe they were returning it or other plausible reason.

 

Personal Story

Backing out of my garage to run some errands, I noticed the noncompliant HOA neighbor across the street had put in their trashcan a long metal bed rail.

The rail must have been a good 2 to 2 1/2 feet beyond the height of the trashcan.

Returning about an hour later I found that the garage door did not respond to the press of the button on the opener.

Entering my home through the front door, the caregiver for my wife explained that a loud bang had occurred in the garage.

My super-sleuth scenario was that the trash truck had tried to empty the contents of the bin and upon doing so it rejected the long rail and, like a spear, it flew against the garage door creating the situation.

I contacted the HOA and the trash company and voiced my concerns only to find out that one and one do not equal two, but equal a huge embarrassment and left an egg on my face.

Long story short the loud bang that was heard in the garage was the breaking of the spring that just happened to occur on trash day and during the time that I was away.

I was wrong and readily admitted my mistake to all involved.

Like my encounter with the broken garage spring, judgment based on assumptions will most likely lead to wrong conclusions.

As it relates to our personal finances, there can be wrong assumptions reflected on our credit report which may lead to a poor credit score and ultimately cost us money.

 

What is Credit Restoration?

Credit restoration is the process in which an individual begins to review their credit report to determine whether all of the information is accurate.

If there are any discrepancies or areas of the credit report that the individual does not agree with then it may adversely affect their credit report and subsequently their credit score.

Consequently, as part of the credit restoration process, the individual may dispute some of those areas in question by providing a written document that disputes that information.

The written letter should reflect the issue at hand, and what the individual feels should be the accurate portrayal of the matter.

Once the letter has been received by the credit reporting agencies, they have 30 days to investigate the matter and make a determination.

All of this credit reporting and possible misinformation is guaranteed to the individual under the provisions of the Fair Credit Reporting Act.

 

15 Ways and Tips to Help With Credit Restoration

 

1. Pull Your Credit Report

The first step in restoring one’s credit is to determine whether there are any errors on the individual’s credit report.

This can be accomplished by requesting one’s credit report.

This credit report should be generated by the three major credit report companies.

Those companies include Experian, Trans Union, and Equifax.

This request can be accomplished by going online, verifying one’s identity, and requesting copies.

According to recent legislation enacted in regards to credit reports, this can be accomplished once a year and is provided at no charge to the individual.

Once the credit reports have been received, then the individual should look over those reports to see if there are any discrepancies or other errors in the report.

 

2. Remove Errors 

If the individual sees a mistake or error on their report.

They then can go through the process of disputing that information.

There are a number of templates online that can be downloaded and used as a type of “fill in the blank” form and can be mailed to credit reporting companies.

 

3. Timely Payments 

Another way that an individual can restore their credit report is to ensure that all payments owed to creditors are done in a timely manner.

If an individual misses a payment or if the payments are not made on time, this can have an adverse effect on one’s credit report.

To the creditors, as reflected in the credit report, this indicates that the individual, regardless of reason, is not reliable in regards to paying back their debt.

 

4. Minimize Credit Utilization 

Another powerful way for an individual to restore their credit is to minimize their credit utilization.

For example, if an individual has a credit card with a credit limit of $1,000, and they are carrying a balance of $900.

This is an indicator to the creditor that the individual has a significant dependence upon the use of their credit card.

This can be perceived as a negative situation and can subsequently impact the individual’s credit score on being close to maximizing their credit utilization.

A good rule of thumb to ensure credit restoration and a positive credit report is to utilize 30% or less of one’s credit limit on all of their credit cards.

 

5. Joint Account 

Another positive way of restoring one’s credit and increasing their credit score is to be on a credit account with another individual who has a positive credit rating.

This joint account process combines the two credit reports and can be a positive boost if one of the individuals has a more positive credit report or score.

Check out the following related articles for more on credit:

 

6. Experian Boost 

Experian, a credit report company, has a program in which the individual can link all of their bills paid to their credit history and payment record.

Through Experian Boost, the individual can link their checking account and this credit reporting company will utilize other payments that are made to creditors.

Specifically, if a cable bill or utility bill, or phone bill is paid, this information is captured and linked to one’s credit report.

Subsequently, the individual may see a boost in their credit score or rating.

 

7. Add Credit Limits 

Another way that an individual can improve their credit is to ask their existing creditors to raise their credit limit on their credit cards.

If this credit limit is increased, the individual will find that their percentage of credit utilized will go down, and subsequently, this will have a positive effect on their credit utilization.

All of this in turn will help to increase their credit standing and credit score.

 

8. Apply For a New Line Of Credit

Another way that an individual can restore their credit is by making an application for a new credit card.

If a new credit card is issued, this will increase the credit limit of the individual, which will help to lower the credit usage reflected on the individual’s credit report.

 

9. Limit New Inquiries 

As with anything, there needs to be a balance.

So, it is with one’s credit report.

Although the individual may need additional credit, this requires that the company receiving the credit request will need to view the individual’s credit report.

This is known as an inquiry.

This also can have an adverse effect on an individual’s credit report as many inquiries suggest that the individual is in need of more credit.

Though this may be true, too many inquiries will suggest the potential of the customer being credit desperate which would have a negative impact on their credit report and score.

 

10. Reduced Balances 

An obvious way to restore one’s credit is to reduce the ongoing balances that may be reflected on the credit report.

This reduction in credit card or loan balances would indicate to creditors and be reflected on the individual’s credit report that they handle credit well and that their balances are slowly declining in amounts.

All of this would have a positive impact on one’s credit score.

 

11. Consolidate Your Debt 

Another way that an individual can restore their credit is to consolidate their debt.

This simply means that a consolidation loan applied for and received would allow the individual to pay off all or some of their credit card debt.

This debt would be consolidated into one loan which is generally at a lower interest rate.

However, it is important to remember that even though the loan is at a lower interest rate.

The terms of the agreement may extend over a more significant period of time.

Consequently, this will reduce the individual’s monthly payments and possibly help them to pay off their loan earlier due.

 

12. Monitor Progress 

As part of the process of restoring one’s credit, it is also important to monitor the progress that is being made.

This may prove to be beneficial to the individual in helping them stay on track and being motivated by the decline in their indebtedness.

This monitoring process can be accomplished by using an app that can be downloaded on one’s smartphone.

Or by simply creating a spreadsheet and appropriate graph that reflects the downward trend of the indebtedness may prove to be motivational.

 

13. Use a Secured Credit Card 

Another way that the individual can help restore their credit is by utilizing a secured credit card.

A secured credit card is a credit card but is preloaded with a certain amount of money provided by the customer.

When the application is made for a secured credit card, generally, there is no hard pull or inquiry on one’s credit report.

The money is deposited and becomes the positive balance on this card.

The card is then used as a credit card but rather than the balance increasing the balance decreases as the deposited amount offsets the expenditures.

 

14. Diversify 

Another important component of improving or restoring one’s credit is to have a diversification on one’s credit report.

This means that the individual should not just have all credit cards listed on the report.

It is important to have a combination of extended credit that covers a variety of credit opportunities.

As an example, there can be revolving credit accounts, such as from a department store, credit cards, mortgage, car payment, and other types of loans.

This will help to restore one’s credit because it shows that the individual is responsible as it pertains to all uses of credit options.

 

15. Use a Credit Restoration Company

There are many pros and cons to utilizing a professional credit restoration company.

Generally, the services of the credit restoration company will work with the individual by asking for the credit report.

If there are any discrepancies, the company will, on behalf of the individual, generate the letters to the credit reporting agencies to dispute those anomalies and try to get them corrected on the report.

It is important to note that even if an individual notices a discrepancy and pens a letter to the reporting agency, there is no guarantee that the credit reporting company will take action.

Therefore, using a credit restoration company may provide the added dimension to get the credit reporting company’s attention and realize that legal action may be pending if the issue is not addressed.

However, the individual may be able to provide that same impetus to the credit reporting company by using the proper language in the generated letter that they submit.

If considering the use of a credit repair company.

It is important to do one’s research and to utilize a firm that has good customer reviews and approval from the Better Business Bureau.

 

Credit Restoration FAQs

 

How Many Points Does a Credit Card Raise My Score?

If an individual has one credit card in their name, adding a second card will increase their credit score by roughly 7 to 15 points.

However, it is important to note that the score will not rise immediately.

In fact, the credit score may decrease because of the issuing card company pulling one’s credit card and making an inquiry.

 

How Is My Credit Score Determined?

There are a number of factors that go into providing a credit score for an individual.

Also, there are different models utilized by individuals and companies wishing to check one’s credit score.

The two major credit scores are FICO and Vantage score.

The specific factors that will generate a score include the amounts owed by the individual, their payment history, credit history, credit met, and new credit.

Additionally, their credit scores are given a rating, ranging from poor to excellent based on the numerical value of one’s credit score.

 

Conclusion

Although a credit report does not reflect one’s individual worth, it does, however, for the most part, accurately reflect an individual’s ability to handle credit.

Therefore, one’s ability to manage their finances and properly manage credit extended is worth quite a bit to the individual in regards to being offered the best interest rates and additional extension of credit.

If an individual finds themselves with a less than stellar credit report, there are a number of steps that an individual can take to restore their good credit.

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Apart from being a seasoned Personal Finance expert who has written for top publications around the world, I bring significant personal financial experience. Long story short... through bad financial choices... I found myself $100,000 plus in debt. I was able to dissolve this indebtedness and regain financial solvency. This financial turn around was accomplished through reading, studying and implementing a financial plan. My financial plan included paying down my debt through budgeting, being cognizant of where my financial resources were being spent, changing my attitude about money and understanding the binding chains of the improper use of credit. Today, and for 10 years, I have been debt free and have invested wisely to enjoy my current retirement. This is allowing me to write to help others make, save and grow money wisely!