Don’t Pay for Credit Repair: Use These Proven DIY Strategies Instead

Paying for credit repair is a costly endeavor, far exceeding the cost of repairing it yourself. There are strategies anyone can use to protect and rebuild credit including setting up two-factor authentication, freezing accounts, setting up notifications, and disputing inaccuracies. Let’s dive into these approaches and help you feel more empowered and save you money in the process. 

Protect Yourself from Fraud and Scams 

Identity theft can lead to hopelessness, stress, and may delay your financial goals. If someone steals your identity and takes out a loan in your name, it can cost you money and take six months or more to remove fraudulent activity from your credit report. Protect yourself from fraud and scams by setting up two-factor authentication on your mortgage, bank accounts, and social media accounts. This added security can significantly reduce the chances of someone stealing your information. Additionally, you can freeze your credit accounts, set up notifications, and alerts. Alerts are helpful in the event someone opens an unauthorized account; your credit score increases/decreases, or a loan is paid off.  

Dispute Inaccuracies  

If your personal information is stolen and you find unauthorized loans or other inaccuracies on your credit report, work to get them removed immediately. File a police report if necessary, and submit copies (not originals) of any documentation you have to each credit bureau, specifically Experian, TransUnion, and Equifax. A police report can strengthen your case. Acting swiftly can help prevent further damage to your credit and financial security. Once errors are removed, request a copy of your updated report. It is important to note that negative information older than seven years (or bankruptcies older than ten) should not appear on your report under the Fair Credit Reporting Act.  

Limit Hard Credit Checks and Inquiries

When you get pre-approved for a car, home loan, or credit card, lenders usually perform a soft credit check to determine your creditworthiness. A soft credit check does not impact your credit score or appear on your credit report. When you apply for that car, home, or credit card and submit for final approval, a hard credit check is conducted. Hard inquiries can lower your credit score by up to forty points and remain on your credit report for up to two years. Protect your score by limiting hard inquiries.  

Add an Authorized User

If you are a parent and want to build your child’s credit score, ask your credit card company to add them as an authorized user. You don’t have to give them the card; simply being listed on your account can help them establish a credit history. Keep in mind that you need to make your payments on time, as missed payments can hurt your credit as well as your child’s. Check with your credit card company about age requirements and whether they will report authorized user activity to the credit bureaus to ensure your child receives the benefit.  

Secured Credit Cards 

If you’ve recently turned 18 years old or have been without credit for several years, consider acquiring a secured credit card. With a secured card, you are required to fund the account with your own money. You use the card like a regular credit card, and your payment history is reported to the credit bureaus, helping you build credit. Please note the credit card company will still charge you interest. Make payments on time and keep your balance low to improve your score. Once you have established good credit, you may ask for an unsecured credit card and a higher credit limit.  

Increase Your Credit Limit

If you’re approaching 30% utilization on your credit cards, you may request a credit limit increase. This will help you avoid reaching the 30% threshold and maintain a low utilization rate. Credit can make your financial goals a reality or delay them longer than anticipated.  

When building or rebuilding your credit, take the necessary steps to protect it from fraud and scams, dispute inaccuracies immediately, set up alerts, and limit those hard inquiries. By following these steps you can work towards the life you want a bit more comfortably. Seek out professional advice when necessary and remember to take it one step at a time.

Samuel Molina is an Accredited Financial Counselor® and CEO and Founder of The Academy of Financial Education, a non-profit organization dedicated to narrowing the wealth gap for its community through activities, coaching, education, and instruction. Visit Samuel’s FindAnAFC profile to view his services and connect with him on LinkedIn.