Mistakes to Avoid When Repairing Your Credit

Repairing your credit doesn’t have to be hard. In fact, many people find it to be quite easy once they get started. 

However, if you make a mistake on your credit repair journey it could set you back a few months or more. Therefore, this article is going to discuss the top mistakes to avoid when repairing your credit. 

Mistakes to Avoid When Repairing Your Credit

See Also: Tips for lowering your debt this year

Taking on new credit

When you’re trying to repair your credit, it’s important to avoid taking on new credit. New hard inquires are going to temporarily drop your credit score and if you end up not getting approved for the line of credit, you’ve taken a hit for no reason. 

Plus, the goal of repairing your credit should be to become more financially stable so you don’t have to worry about reoccurring debts each month and instead can focus on reaching other financial goals. 

Not researching credit repair companies

While it is possible to repair your credit yourself, I do understand that many of us are busy and it seems quicker and easier to start the credit repair process by getting help from professionals such as Strategic Consulting

However, when looking for said credit repair companies, you will find that there are a ton of options AND many of them are not legit companies. 

Therefore, if you do choose to go with a credit repair company to help you jumpstart your journey it would be a mistake to just go with the first company you come across or the cheapest. 

Make sure you do your research and look for legit reviews left by their prior customers. 

Not making a budget

One of the first steps to repairing your credit is going to be paying off your debts, or at least making sure that each account has no more than a 30% utilization. 

To start seeing improvements to your credit score quickly you’re going to need to pay a lot more than the minimum payment. 

Therefore, you’re going to need to have a budget, so you can free up some of your income to start making a dent in your debt. 

Paying your lowest balances first

Paying your lowest balances first will make it seem like you’re doing big things financially. However, usually, this isn’t the smartest move. If your lower balances are under a 30% utilization they’re not really affecting your credit negatively. 

You want to start off with your highest interest rates first (to save money) and then move on to your largest balances. 

This way you’ll gradually start to see your credit score improve each month. 

Closing old credit card accounts

A percentage of your score comes from the length of time you’ve had credit. Therefore, closing old credit card accounts is typically never a good idea as it affects your credit age. 

If the interest rate is high or it’s just an overall crappy credit card, simply don’t use it. You can use it once every six months to keep it open AND pay the balance in full before the statement closes (to avoid interest charges) and be done with it. 

Not being patient

Seeing a significant change in your credit score can take time depending on how badly you’ve damaged it. For example, hard inquires, late payments, collections, and bankruptcies will stay on your credit report for years. 

Additionally, just because you do pay off a credit card in full, you also have to wait for them to report the payment to the credit bureaus, which they only do once a month. 

Repairing your credit is going to take patience. But in the end, it is definitely worth it. 

Missing some payments

I’ve seen a lot of credit repair guides that suggest missing some payments so you can pay off other balances. This is very bad advice…don’t do it. 

Late payments will show on your credit report for years. Instead, when focusing on paying off other debts entirely make the minimum payment on the remaining debts. Never pay late or stop paying entirely. 

Not checking your credit report

You should already be checking your credit report at least annually since it’s free to do so. 

However, when starting your credit repair journey it’s important to check it so you know what all is showing on your credit report and so you can dispute any inaccuracies. 

As you pay off debts, you’ll want to periodically check, so you can see what type of progress you’re making. 

Many banks and credit cards offer FICO scores for free and update them once a month. 

Avoid these mistakes and you’ll have your credit repaired in no time

As long as you’re not making fatal mistakes when repairing your credit you can expect to see a huge improvement in your credit score within 6 months to 1 year depending on how aggressively you tackle your debt. 

Just remember once you have successfully repaired your credit to practice good financial habits so you don’t find yourself in the same situation again. 

Mistakes to Avoid When Repairing Your Credit

2 Comments

  1. rachel frampton says:

    My mother would like to apply for a loan, which is why she had decided to start looking for a credit repair service. Thank you for clarifying here as well the importance of strategic consulting. It’s also a good thing that you reminded us about the possible hardships of repairing the cards.

  2. Rob S. says:

    When it comes to repairing new credit, applying for new lines of credit is perhaps the biggest oversight. This will only make it difficult to pay back the amounts already owed.

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