Financial Literacy Month Series: Credit Building & Repair

Credit Building and Repair

To start out our Financial Literacy Month two-part blog series we have for you: Credit Building & Repair.

In this article, we’ll give you the basics for starting your credit-building and repair journey. We will cover dos and don’ts and provide resources to help you navigate the credit score scene.

Just a reminder that depending on your circumstances you may need a more personalized approach to building or repairing your credit. We do have a Certified Financial Credit Union Financial Counselor on staff, Alyssa Walford that’s always willing to help. She offers a Credit Building and Repair Program and can get you started in the right direction. There are also other credit counseling services out there that can help but beware of scams (see below).

Also, check out our free online resource for our members, MoneyEdu. You’ll find useful information about credit building and repair plus hundreds of other videos, calculators, interactive exercises, and topics to explore.

Building Credit

  • Use your bank account responsibly – bounced checks could make it difficult to open other accounts in the future.
  • If you have services in your name such as telephone, cable, gas or electric, make sure you pay your bills in full and on time.
  • Consider one credit card. Having numerous credit cards will not necessarily help your credit score and may increase your risk of financial problems. If you do have more than one or two cards, consider paying the extra cards off and stop using them.
  • Always make payments for loans and credit accounts by the due date each month. Even being one day late may increase your interest rate and could result in a late fee ($35 on average). If a payment is more than 30 days late, your credit report may be negatively impacted for up to seven years.
  • If you have an emergency and cannot pay your bills, contact your creditors. Before you call, have a clear summary of why you can’t pay and what you would like the creditor to do to help. For example, if you can’t afford a $100 minimum payment, maybe you can afford a $40 minimum payment.
  • Review your credit report periodically for accuracy. Knowing what’s on your credit report will give you a chance to dispute any information you feel is inaccurate.

Repairing Credit

  • Get your credit reports from each of the major credit bureaus (Equifax, TransUnion, and Experian) through the official AnnualCreditReport.com website. Be sure you use this website, not another with a similar name. Even the links through the official site offer optional services, but none are required. In other words, you should not have to provide a credit card number to obtain a credit report.
  • Check your credit report for errors. Unrecognized loans or credit cards, unknown employers, or unknown addresses could be signs of identity theft. If you find any of these errors, contact the credit reporting agency to request an investigation. Keep in mind that minor errors – such as an old home address or former employer being listed as current – are common and are usually nothing to worry about.
  • Contact your lenders to see if it is possible to renegotiate your payment plan. You may seek an interest rate reduction or the ability to delay payments without affecting your credit report. Above all, you want your accounts to be listed as “current,” not past-due.
  • Avoid the temptation of applying for new credit cards by opting out of receiving unsolicited offers. Call 1-888-5-OPT-OUT (1-888-567-8688) or visit www.optoutprescreen.com to get started. You’ll also want to avoid any other kind of unsecured consumer debt, including retail store cards.
  • Make regular payments, even if you can only afford the minimum amount.

Credit Repair Scams

FACT: there are no quick fixes when it comes to repairing your credit. It may seem enticing when you hear about a “credit repair” company that can erase all your bad credit records in the blink of an eye. Sad to say but these companies are simply trying to make a profit off of people who need help from an actual credit counselor. If you are seeking a credit counseling or credit repair company, please beware of companies that:

  • Promise to erase your bad credit or remove bankruptcies and judgments from your credit file. No one can have accurate information removed.
  • Promise you fast and easy credit repair. If you have bad credit, it can take years to fully repair it.
  • Advise you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
  • Offer to create a new identity for you.
  • Want you to pay for credit repair services before providing any services.
  • Will not tell you your rights and what you can do yourself. For example, remember you can order the credit report yourself for free, once a year. If you see errors on your report, you
    can also request that the credit reporting agencies make appropriate changes.

Hopefully, that gave you a sense of direction on your journey to build or repair your credit so you can reach your financial goals. Make sure to stay on top of your score and history even after you’ve put in the work to repair or build it up. It’s an ongoing process but it will be worth it when it comes time for major purchases like buying a home or car.

Check out the videos, quizzes, and how-to guides below to get started on your credit-building & repair journey!

Take this 12-question Credit Score Quiz to test what you really know about your credit score.

Take this other quiz from Experian, How Much Do You Know About Your Credit Scores?

Check out these calculators, assessments, and data tools on MoneyEdu.

Go to the Consumer Financial Protection Bureau (CFPB) website and check out their how-to guides.

Try watching these informational videos from CFPB if you are more of a visual learner:

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