Fix Credit


Finding out you have bad credit often comes at the worst time. You’ve just applied for a credit card, a car loan, a mortgage or even an apartment, and you were rejected.

Along with the dream-crushing news comes a letter that spells out the reasons you weren’t approved. It may say things like “Too few installment accounts” or “No recent revolving account activity.” And even though they’ve given you reasons why your credit isn’t good enough to be approved, you’re still lost on how to actually fix your credit.

The first thing you need to do is get your credit reports and credit scores. You can get free copies of your credit reports once a year under the Fair Credit Reporting Act. (Here’s how to get your free annual credit reports.) You should get your credit reports from each of the major credit reporting agencies, since each report may contain different data that could impact your credit scores. You’ll rarely know which credit report is being pulled by a lender, so it’s important to make sure all of them are accurate and you’ve addressed any and all issues. You can check your credit scores for free on to track your progress as you fix any credit mistakes.

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You Can’t Fix Bad Credit in 30 Days

Some credit score mistakes can be resolved quicker than others.

A good example is your credit utilization — the amount of debt you have relative to your credit limits, and the second most important factor in your credit scores. It’s best to keep your credit utilization below 30% (10% is even better) to show creditors that you can manage your available credit responsibly without maxing out your cards. If you went a little overboard during the holidays and went over that 30% mark, you can pretty quickly undo any small drop you may have noticed in your score by paying off those balances and getting your percentage back under 30%.

But that is more the exception than the rule. Some credit mistakes will impact your score for years. It’s tough news to hear, especially if you were really counting on that mortgage approval to finance your dream home. That’s why checking your credit on a regular basis is important. If you spot a mistake and can get it fixed before you apply, you can avoid getting that “Dear John” letter from a lender.

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So How Long Does It Take to Repair My Credit?

If you have accurate, negative information on your credit reports, it can take a while for it to age off. Here’s how long negative marks can remain on your credit report:

However, if you have inaccurate, negative information on your credit reports, you can see some big changes relatively quickly to your credit scores. Credit reporting agencies have to respond to disputes of inaccurate information within 30 days, which is much shorter than the years-long wait you’ll face with accurate derogatory information. If the credit reporting agency sides with you, they must remove the mistake immediately by law. In a 2012 Federal Trade Commission study on credit report accuracy, 79% of people who disputed an error on their credit reports had that error removed.

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