Have you ever considered using a credit repair agency to help fix your bad credit?

If you consistently carry a balance on your credit cards, use most of your available credit limits or make late payments, you probably have a low credit score and feel like you need help in order to turn things around.

You might not know this, but it’s actually possible to repair your credit for free!

How is free credit repair even possible?

When Dannie and I started our financial journey, our credit scores were in the 500s but they are now in the 800s. We never paid anyone to help us and we don’t want you to do that either. That’s because we know, for a fact, free credit repair is possible.

I wouldn’t go as far as calling credit restoration companies a scam, but most of the services they provide can be done for free if you know what to do and are willing to take action.

So, save yourself the $50 – $90 monthly payment you would be giving them and let us show you how to repair your credit on your own:

1.) Figure out exactly how bad things are.

Before you can improve your credit score you’ll have to figure out what issues are causing it to be low in the first place.

We recommend doing two things to get started:

• Sign up for a FREE account with Credit Sesame to view your credit score and some of the factors that are currently affecting it. – Sign Up!
• Request your FREE detailed credit report from each of the credit reporting agencies online or by calling 1-877-322-8228. – Request your report!

By doing these two things, you’ll be able to see what information is being reported to the credit bureaus. You’ll need to carefully read through all of your reports and verify that all of the information is correct.

When we did this, Dannie found out multiple errors were tanking her credit score.

2.) Fix any errors you find.

If you find any errors on your credit report, there are a few steps you can take to have that information permanently deleted. You’ll need to do the legwork here because the agencies aren’t responsible for fixing errors on your report unless you ask them to do so.

Getting rid of errors

Information that is clearly an error (i.e. not your name, you didn’t open the account, etc) can be disputed by sending a letter to the credit reporting agency. The FTC has a great guide for completing this process and each of the credit bureaus have information about this process on their websites as well.

Thanks to the Fair Credit Reporting Act, when you send this letter, the credit reporting agency only has 30 days to complete an investigation. (Make sure you send it as certified mail so you KNOW they got it). After those 30 days are up, they must either verify or delete the items in question. Dannie was able to get 8 items completely removed from her credit report this way. That caused her score to jump more than 100+ points. – Sample dispute letter you can send

Dannie is the queen of spreadsheets so she made a file to track all of the letters she needed to send!

Negative information

Negative information (i.e. items in collections, charged off credit cards, late payments, etc.) can only be reported for 7 years. Sometimes, this negative information will still show up on your credit report even after that time limit has passed. You can dispute these old accounts in the same way that you would dispute erroneous information.

Some people also have luck with negotiating settlement offers with collection agencies. Make sure you get something in writing that clearly specifies the amount you will pay but do NOT give them electronic access to your account.

3.) Don’t close or open any credit accounts.

Some financial gurus are famous for telling people to cut up their credit cards and close the accounts associated with them. If you care about maintaining or improving your credit score, this advice can actually be disastrous for your goals.

Credit history and credit utilization make up 45% of your overall credit score calculation. Each time you close an old account, it decreases your average credit age. It also decreases your available credit which may increase your credit utilization if you still have balances on your cards.

Try putting all of your credit cards in a cup of water and freeze them for a while. You won’t be tempted to use them when they’re frozen solid!

Your credit score will drop each time you apply to open a new credit account. You’ll have to get a credit check to open the new account and those inquiries stay on your report for 2 years. Each new account will also decrease your average credit age as well.

4.) Get your spending under control.

One of the biggest factors that affected our credit scores was our credit utilization. We had several credit cards, but most (if not all of them) were maxed out because we were living well above our means.

This is probably the case for most people, so you’ll have to get your spending under control in order to start making progress. The good thing is that your credit score will begin to rise, almost immediately, as you begin paying off your credit card debt.

Develop a game plan, create a budget and track your spending throughout the month.

5.) Start paying your bills on time.

Payment history is the biggest influence on your credit score, it accounts for 35% of the calculation. You HAVE to start paying your bills on time if you want to repair your credit score, even if you start by just making your minimum payments.

Catch up on any old bills and then never miss another payment. We built up a one-month buffer in our checking account and that helped us break the paycheck to paycheck cycle. This also kept us from ever having late or missed payments and eventually made it possible for us to start paying off debt.

6.) Pay off your debt.

Decide on a debt payoff strategy that works for you (i.e. the debt snowball or debt avalanche) and get busy. It doesn’t really matter which one you choose as long as you start paying off debt.

Try to prioritize paying off your revolving debts first (credit cards). Those debts have a higher impact on increasing your credit score. As your balances decrease, your available credit will increase. This ratio is your credit utilization and the lower that is, the better. You should try to keep it under 30%.

You can calculate your utilization yourself or you can see it when you check your credit score on sites like Credit Sesame.

7.) Stay focused.

Don’t be too hard on yourself when you take on the task of DIY credit repair. You didn’t get into debt and lower your credit score overnight, so don’t beat yourself up when you don’t see immediate results.

Personal finance is personal and your timeline will be different than everyone else’s. That’s fine, just stick to your plan and follow the steps I mentioned above.

You don’t have to pay anyone a monthly fee to fix your credit. Credit repair is pretty easy once you find the right information.

What you do with that information is entirely up to you!

Good luck!

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$tay Wealthy Friends,

— DJ