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Rebuild Your Credit with O1ne Mortgage: DIY Tips for Success

If you’re looking to improve a spotty credit history and boost your credit scores, be cautious of for-profit companies offering “credit repair” services. These services often leave customers worse off than before and can’t do anything you can’t do yourself for free. Here are some do-it-yourself credit repair tips to help you rebuild your credit without spending money that could be better used to pay off debt.

1. Consider Credit Counseling

If you need external help to improve your credit, consider seeking assistance from a nonprofit certified credit counseling agency instead of a credit repair firm. A certified credit counselor can assess your financial situation, help you create a budget, and develop a plan to get out of debt. They can also negotiate with creditors for lower payments or repayment plans that fit your budget. Credit counselors are generally more affordable than for-profit companies, and some offer services for free or on a sliding scale. You can find certified agencies through the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

2. Communicate With Creditors

If you anticipate difficulties in keeping up with your bills, reach out to your creditors as soon as possible, ideally before missing any payments, to negotiate some relief. If your financial troubles are temporary, consider asking for forbearance on your loans, which can temporarily reduce or suspend payments. Once the forbearance period ends, you’ll need to resume your original payment schedule.

3. Check Your Credit Score

To rebuild your credit, it’s essential to know where you stand at the start. Credit scores are crucial indicators that lenders use to gauge creditworthiness. You can check your FICO® Score from Experian for free to get a “before” picture for your credit makeover.

4. Review Your Credit Reports

Your credit reports are records of your borrowing and repayment history and form the basis for your credit scores. Many lenders review them in detail when considering loan or credit card applications. Ensure your credit reports from Experian, TransUnion, and Equifax accurately reflect your borrowing and payment history. You’re entitled to a free copy of your credit report from each bureau at AnnualCreditReport.com. Check all three reports carefully and dispute any inaccuracies with the relevant credit bureau to get them corrected. Removing inaccurate entries that hurt your credit score can lead to score improvement.

5. Prioritize On-Time Payments

Your payment history significantly impacts both FICO® Score and VantageScore® credit scores. Setting up a system to avoid missing payments is crucial for credit repair. Missed and late payments remain on your credit reports for up to seven years, negatively affecting your credit scores. Avoiding missed payments is essential for long-term credit improvement.

6. Pay Down Credit Balances

High credit utilization—using more than 30% of your credit limit—can lower your credit scores. Paying down balances can quickly improve your credit scores. Focus on the credit utilization for each card and prioritize payments accordingly. Lowering utilization by any amount can improve your credit scores, and individuals with excellent credit scores tend to keep utilization at 10% or less.

7. Pay Off Collection Accounts

If a missed payment is turned over to a collection agency, it will be noted on your credit reports and remain for up to seven years, adversely affecting your credit scores. Paying off debts in collections won’t remove negative entries but will show that the debts have been paid. Newer versions of the FICO® Score and VantageScore systems ignore paid collections, so paying off collections accounts could improve your credit picture.

8. Keep Track of Your Credit

As you work on credit repair, routinely check your credit scores to monitor improvement and review your credit reports at least once a year for inaccuracies or signs of credit fraud. You can check your Experian credit report for free anytime.

9. Be Patient and Persistent

Repairing a spotty credit history takes time and discipline. Major damage, such as bankruptcy or foreclosure, may take several years to repair. However, by applying these tips today, you can see meaningful credit score improvement within a few months. Making these tips a habit can lead to steady credit improvement.

The Bottom Line

Do-it-yourself credit repair won’t bring instant results, but neither can paid credit repair companies. Improving your credit takes time and discipline. By following these tips, you could start to see credit score improvement within a few months. As you track your progress, consider using Experian’s free credit monitoring service for regular updates on your FICO® Score and notifications of new activity on your Experian credit report.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you achieve your financial goals with confidence.

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