How Can You Repair Your Credit?

Is your credit score bad, and are you feeling like there is no way out of financial debt? Read here to learn more about ways to improve your credit today.

Bad credit can be a huge roadblock towards getting your finances in order. Unfortunately, when you have bad credit, getting access to financial assistance becomes more difficult. Getting slammed with high interest rates can dig your credit score even lower. Having access to credit can be crucial in the process of accumulating wealth and providing for your family. 

You may think that if you have a bad credit score, you will have no chance of securing a credit card, or that there is no way to repair your credit. The good news is, because of past financial crises more innovations to supply credit assistance to those with a bad credit score. This is your guide to resources that will help you improve your credit today. 

Credit Repair Companies 

Credit repair companies can be a great way to improve your credit, especially if you do not know your credit score or are suspicious of fraudulent activity negatively impacting your credit score. Credit repair companies monitor your credit reports and challenge any negative aspects that are impacting your score. 

Credit repair companies scan and isolate negative items in your credit score report and dispute them for you legally, to help improve your credit score. These negative items may involve late payments, change in financial status for reasons such as divorce, bankruptcies, late payments, or charge-offs. This path is excellent if your credit has been negatively impacted by a hospital stay, change in family structure, student debt, or identity theft. 

Credit repair companies offer four main services for a cost that generally falls under $200 per month: 

  • Credit Monitoring With credit monitoring, the credit repair company will help you set alerts for credit card spending limits, request free credit reports from all three major credit bureaus, watch for suspicious activity in your credit reports, and review your account statements. 

  • Debt Consolidation In order to limit the interest fee you are paying on the credit debt you have incurred, the credit repair company helps you move all your credit debt into the card or location that has the lowest interest rate. If you qualify, they limit how much interest you are paying on your debt as you pay it off. 

  • Credit Reports The credit repair company requests your three free credit reports in order to keep track of your credit score and make sure there is no fraudulent activity negatively impacting your score. 

  • Credit Assessments Credit repair companies run a credit assessment of your credit profile in order to optimize your credit profile and advise you on steps to take when it comes to diversifying your credit profile or managing your credit utilization. 

Some of the best credit repair companies include the following:

  • SkyBlue: SkyBlue offers a variety of services for a low monthly fee. All of their services are included in their $79/Month cost, no upgrades or premium costs to worry about. They offer faster dispute times, score assistance, credit rebuilding, debt validation and more.

  • Ovation (by Lending Tree): Ovation offers credit repair services, credit education, and credit monitoring. With a free consultation you can determine if Ovation's services are right for you. Their essentials plan is $79.00 a month. Unlike SkyBlue they offer a premium plan, essentials Plus, for $109.00 a month. Ovation does offer multiple discounts and deals on their services, you can see their offers here.

  • Credit Saint: Credit Saint offers free consultation services. After your free consultation you can choose between three different plans. Credit Polish, their basic plan, is geared towards fixing minor to moderate credit issues. It starts at $79.99 a month. Their more advanced plans, Credit Remodel and Clean Slate offer more robust features at $99.99 and $119.99 per month.

  • TheCreditPros: The Credit Pros have the best price point on this list for their basic services. Their Money Management Plan starts at $69 a month. While it doesn't offer as much as their Prosperity or Success Plus plan, the basic features of the Money Management plan are comparable to other basic plans available to help you repair your credit.

Credit Utilization 

Credit utilization is an important concept to understand when striving to improve your credit. Basically, you should always intend to utilize no more than 30% of the credit amount offered by your credit cards. Say for example, your credit card offers a $600 credit balance and you have used $500 of that balance. Using so much of your credit balance without being able to pay it back enormously decreases your credit score. But if you have two cards with a total credit balance of $1200, and you have used only $500, this will much less dramatically impact your credit score. This is credit utilization. The key is to try to spend the same amount you would if you had one card but have more than one card, so your available credit amount is much higher. 

Another reason you may want to open a new credit card is to diversify your profile. When all of your credit can be traced back to just one or two banks or institutions, this minimizes the available check points for credit lenders when they are consulting about your credit history. If you have a diverse credit profile, this gives more opportunity to prove yourself to credit lenders as ready to take on a new line of credit. Basically, the more credit you have, the more likely you are to receive more credit, as long as you manage your credit sources responsibly. 

Acquiring a New Credit Card 

It may be counterintuitive to open a credit card and assume more credit responsibility if your credit score is bad. However, this is a great way to improve your credit in the long run. Many credit card companies offer a low or interest-free introduction period when you open a credit card with them. This way, you may consolidate any debt you have from other credit cards under this card, and pay off your debt during the introduction period with no interest or a much lower interest fee. 

This method is very helpful if you have incurred debt under a high interest fee. Even once the introduction period is over, if you can transfer your debt from a high interest payment method to a lower interest payment card, you end up saving a lot of money while you pay off the debt. 

Another reason why having multiple credit cards can be useful is that credit cards offer various rewards. Some offer points that go towards air travel, and some offer points that curb your gas and car travel costs. If you use multiple credit cards wisely, using each card to incur more points in different scenarios, you end up saving on everyday costs. This allows you to save money that goes towards paying off any credit card debt you have.