How to Repair Your Credit

Tara Mastroeni
Published: July 20, 2016 | Updated: December 11, 2021

gold credit card

It’s often said that there are two things we can’t avoid in life: death and paying taxes. However, if you’ve ever had a bad credit score, you might feel like adding “raising our credit score” to the list. Without good credit, your financial opportunities can be significantly limited since our nation runs on a primarily credit-driven economy.

If you find yourself in this position, it may feel like you’re fated to stay there, no matter what, but that isn’t true. There are strategies you can take to repair your credit and recapture the financial opportunities you had before your credit score tanked. Here are five strategies that you can use to repair your credit and raise your credit score.

store open sign

1. Pay Bills On Time

One of the easiest ways to start down the path of bad credit is to leave bills unpaid until they’re reported to the credit bureaus (i.e., Equifax, Experian, and TransUnion). Paying bills a few days late usually doesn’t hurt your credit score. However, if bills remain unpaid after 29 days, you can count on the credit bureaus learning about it and lowering your score.    

2. Only Buy What You Can Afford

You may be able to buy something expensive with your credit card, but there’s a big difference between having the power to purchase something and having the ability to afford it. A common way people get bad credit is buying things they can’t pay for when the bill arrives. As late fees and interest add up, they soon owe far more for what they purchased than they originally paid.  

3. Chapter 13 Bankruptcy

Bankruptcy. The word alone inspires visions of bad credit that takes years to repair. Yet, if you have major debt that bankruptcy can eliminate — and paying the debt under current arrangements isn’t feasible — bankruptcy can help repair your credit.

After you complete bankruptcy, your credit score will be low and probably stay that way for a few years. However, your credit will gradually recover, and the debt you eliminated through bankruptcy won’t hinder the process.

Some people don’t explore the option of bankruptcy for long-term credit repair because they think that filing for bankruptcy means “losing everything”. this isn’t exactly true. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy lets you pay debt on terms you can afford — and you aren’t required to liquidate possessions to help satisfy the debt.

debit card4. Report Zombie Debt

One of the most frustrating reasons for less-than-stellar credit is having debt you no longer owe that still show up on your credit report This is called “zombie debt”. If a creditor or the credit bureaus fail to note that a delinquent debt is paid, it can stick on your credit report and suck the life out of your credit score. You can report zombie debt to any of the credit bureaus. The sooner you do, the faster you can start to repair your credit.

5. Request Your Credit Score

The credit bureaus Equifax, Experian, and TransUnion are required to let you request your credit score once annually, without the request counting against your credit score. Simply requesting your score won’t make it jump any higher, but it can help you chart your progress, as you use the strategies above and others to help repair your credit score.

Developing a Plan of Action

As an investor in mortgage notes whose value is partially determined by the credit score of the homeowner or business owner who pays the mortgage, Amerinote Xchange understands the importance of having good credit when it comes to buying and selling real estate. But these are only two situations in which good credit can make your life less financially stressful. If you need to repair your credit, schedule a free consultation with a credit counselor today.