How to fix your credit: 11 easy steps
October 23, 2024
There are several ways to fix your credit, from disputing errors on credit reports to diversifying your credit mix. Let’s walk through 11 tried-and-true ways to improve poor credit.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Achieving a better credit score can mean qualifying for a mortgage, a lower interest rate and overall better terms on a loan or credit card. However, credit issues (including errors on your reports) might be getting in your way. If you’re wondering how to fix your credit and make yourself more appealing to lenders, you’re in the right place.
Our guide takes you through all of the options for fixing your credit, including ways to improve your credit score and remove errors and certain negative items from your credit reports. Below are 11 steps you can take to fix bad credit.
Table of contents
- Get your credit reports
- Check your credit reports for errors
- Dispute errors on your reports
- Pay late or past-due accounts
- Increase your credit limits
- Keep your credit utilization low
- Pay off high-interest, new credit accounts first
- Diversify your credit mix
- Improve credit history by leaving old accounts open
- Think twice before taking out credit
- Pay balances on time
1. Get your credit reports
A significant part of fixing your credit involves repairing errors and omissions on your reports. That’s why it’s important to view your credit reports often—to make sure they’re accurate and that there is no fraudulent activity.
How to get a free credit report
You’ll need to start by getting a credit report to determine what exactly needs fixing. Each of the three major credit bureaus is required by law to provide you one free credit report per year, if you request it. That means if you space them out, you can typically get a free credit report every four months.
Because of the COVID-19 pandemic, you can currently get free credit reports weekly through December 2023.
Request yours from the Annual Credit Report Request Service online, via phone at 1-877-322-8228 or by mailing the Annual Credit Report Request Form to:
On your report, you’ll see your credit history, including any credit cards, loans, accounts that were sent to collection agencies and legal actions like foreclosures or bankruptcies.
Because you get three free reports every year, it’s unlikely you’ll need additional copies, but you can purchase them directly from the credit bureaus if you need to.
2. Check your credit reports for errors
Each time you open one of your credit reports, you should review it closely for errors. A 2021 Consumer Reports study found that more than a third of their volunteers found at least one error on their credit reports. In many cases, these errors can be significant, and they can make it harder for a person to get credit with favorable terms or to get credit at all.
Responsibly managing your credit will help you achieve a better credit score, but truly fixing bad credit requires you to focus on the source of the problem.
When reviewing your credit report for errors, be sure to look for:
- Incorrect personal information (e.g., misspellings, wrong addresses)
- Accounts that don’t belong to you
- Missing accounts that should be listed on your report
- Incorrect public records (e.g., bankruptcies, foreclosures)
- Accounts that aren’t accurate (e.g., they say they’re open when they’re actually closed)
- Accounts listed as “closed by grantor” (meaning the lender closed the account on you)
- Duplicate accounts
- Data management errors
- Delinquencies or derogatory marks
- Fraudulent activity
- Incorrect inquiries
Any of these errors could impact your credit—and whether or not a lender will approve you for a loan. If you do find an error on your report, you should also check to see if the error appears on the two other reports produced by the major credit bureaus.
By disputing or otherwise addressing any errors, many people have seen an improvement in their credit standing in a relatively short period of time. Actively working to manage your credit and fix errors may help you achieve better results than if you sit back and wait for your credit to improve on its own.
Pro tip: Review your credit report at least twice a year to ensure there are no new errors. Finding errors and disputing them can have a tremendous impact on your credit and your overall ability to get approved by lenders.
3. Dispute errors on your reports
Once you’ve identified mistakes on any of your credit reports, it’s time to challenge them. Luckily, the bureaus are legally obligated to try and resolve mistakes. You can request a correction online or by mail or phone.
Report your errors directly to the credit bureau where you received your report. You’ll need to provide documentation, such as proof of your identity, the inaccurate, unfair or unsubstantiated account information and any documentation that proves the error is false, such as court documents or credit card closing statements.
File your free dispute with:
Experian Disputes
- Online process
- By phone: 800-916-8800
- By mail:
Equifax Disputes
- Online process
- By phone: 866-349-5191
- By mail:
TransUnion Disputes
- Online process
- By phone: 800-916-8800
- By mail:
You should also contact the lender or creditor that issued the account to let them know of your dispute and the inaccuracy. Oftentimes the lender can correct the information on their end, which should update your reports with the three main credit bureaus. In most cases, you should hear a response to your dispute within 30 to 45 days.
4. Pay late or past-due accounts
In addition to reporting the errors on your credit report, you should focus on paying overdue balances on your accounts. Until a payment is 30 days past due, it isn’t considered late by the credit bureaus.
However, once a payment is beyond 30 days past due, creditors and lenders can report your account to the credit bureaus—which can ultimately impact your score and creditworthiness for up to seven years. Typically, the longer your payment is overdue, the worse it is for your credit.
If it’s too late to prevent a late payment from being added to your credit report, there are ways you may be able to get a late payment or negative item removed after it’s been reported.
When do collection agencies get involved?
If an account has a past-due balance of more than 30 days, your creditor may turn your account over to a collection department or agency to seek the funds directly from you. When an account is sold to a collection agency, the account can be noted on your credit report—often having an enormous negative impact on your credit score.
Collection agencies work to collect funds on amounts due for credit cards, personal loans, auto loans and mortgages. Collection entries should fall off of your report after seven years. If the collection information is incorrect—just like any other error—you can file a dispute.
What is a charge-off?
When payments are 180 days (or six months) past due, your account will become “charged off”—meaning you no longer have the option to make regular minimum payments. Your creditor considers the debt as a loss in their own records, and you may be charged a late fee for each additional month that passes.
Being charged off greatly damages your creditworthiness. Your lender can even increase your interest rate to the penalty rate, which is often the highest rate possible. In addition, your creditor may assign the account to a collection agency. If you can’t afford to pay the amount in full, talk with your lender about payment options. If an account goes to charge-off status, this derogatory mark will usually remain on your report for seven years.
What is a pay for delete?
A pay for delete is an agreement between a consumer and a collection agency to remove a collection account from the consumer’s credit report, so long as the consumer pays the full amount they owe or a lesser agreed-upon amount.
You can send a pay for delete letter to your creditor asking them to remove the charged-off account from your credit report in exchange for paying the past-due balance.
5. Increase your credit limits
Credit card companies give each borrower a credit limit—this is the maximum amount that can be spent before the balance is paid off. Depending on the credit card and your creditworthiness, your credit limit might be a few hundred or a few thousand dollars.
If you ask your creditor to increase your credit limit and they grant it, it could improve your credit score by affecting your credit utilization ratio.
6. Keep your credit utilization low
You’ll also want to consider your credit utilization ratio, which is how much you owe on all of your accounts compared to your total available credit.
For example, if you owe $5,000 across all of your credit cards and you have $20,000 in total available credit, your credit utilization ratio is 25 percent (5,000/20,000). Experts often recommend aiming for a credit utilization threshold of 30 percent or less—the lower, the better.
As your utilization ratio increases, it may begin to negatively impact your credit standing. By increasing your credit limits (without increasing your balances owed), your credit utilization ratio should decrease.
Pro tip: Opening a new credit card increases your total available credit, which can help lower your credit utilization ratio, so long as you don’t also increase how much you owe.
7. Pay off high-interest, new credit accounts first
When you have multiple balances to pay off, there are two main approaches to take.
You can either pay off the account that has the highest interest rate, such as paying off a card with a 14.5 percent APR before addressing a balance with only a 7 percent APR.
Or, you can pay off your account with the lowest balance first, so the balance no longer incurs interest. For instance, if you have a new credit card with a balance of only $400, it may be advantageous to pay that amount in full, rather than having continual interest build on that account. By paying off an account in a lump sum, you’ll also have one less account to think and worry about. Of course, you’ll still want to make at least the minimum payments on your other accounts.
8. Diversify your credit mix
Maintaining a mix of different types of credit can give your score a boost. A diverse mix may look like managing a car loan, credit card and mortgage all at once. Just be sure you can make timely payments before opening new accounts or borrowing additional money.
Pro tip: Try to avoid opening several accounts within a short period, as some creditors view multiple new accounts as risky. The new accounts can also lower your overall credit age.
9. Improve credit history by leaving old accounts open
Remember, the length of your credit history matters. In general, accounts that have been open longer—with a good payment history—are better for your credit. Keep that in mind when deciding which accounts remain open and which ones you should close.
The average amount of time all of your accounts have been open is considered your overall credit age. The older your credit age, the better it is for your credit.
Pro tip: If you don’t use a certain credit card very often but you’ve had the account open for a while, don’t close it. Older accounts show that you’ve maintained a healthy payment history with creditors, which makes you appear more creditworthy.
10. Think twice before taking out credit
When you apply for credit, whether it be to take out a loan or open a new credit card account, the creditor will usually run a hard inquiry (also known as a hard credit check).
Too many hard inquiries in a short period of time, such as a few months, can make you seem riskier to creditors and negatively impact your score. For this reason, it’s important to be mindful of how often you apply for credit.
But note that multiple credit checks for the same kind of loan—specifically mortgage, auto or student loans—grouped into a short period of time (such as 14 – 45 days) are often counted as a single inquiry, so your credit won’t be significantly harmed as long as you make your decision within a couple weeks.
11. Pay balances on time
Paying off your debt is an important part of fixing your credit. By making payments on time, you’re showing your current creditors—and potential lenders—that you are a responsible borrower. Whether it’s your credit card payment or a utility bill, be sure to pay on time.
Pro tip: Set up automatic payments on your credit card, loan and utility accounts. This ensures you pay on time and gives you one less thing to worry about.
How to fix your credit: FAQ
Below we've answered some frequently asked questions about fixing your credit to help you get started.
What is credit repair?
Credit repair relates to many of the tips that we listed above—checking your credit reports, identifying errors and filing disputes with the credit bureaus or your creditors.
Filing and following up on disputes can be time intensive and require a great deal of patience. Some people looking to fix bad credit hire a credit repair company in order to offload the burden of doing so themselves.
Can I pay someone to fix my credit?
You can hire a credit repair company to help you dispute negative items that are hurting your score and address other credit issues.
Keep in mind that credit repair companies cannot help you repair your credit overnight or guarantee the removal of accurately reported items. Be careful of any credit repair companies that promise to fix bad credit fast and boast other exaggerated results.
How long will it take to fix my credit?
Generally, it can take several months for an inaccurate item to be removed from your credit report following a dispute. However, the length of time required to fix your credit will largely depend on your particular credit history and what you do moving forward.
How can I more efficiently fix my credit?
In addition to following the steps outlined above, you may want to partner with a credit repair company that can identify errors and dispute inaccurate or questionable negative items on your behalf. This may be the most efficient method, since fixing credit can be a time-consuming undertaking.
If you want to improve your credit—ultimately leading to approval for higher loan amounts with better terms—consider consulting a professional for guidance. With the right help, you can work to improve your financial standing and achieve your credit goals.
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona. In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
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