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What Is Credit Repair?

What Is Credit Repair?

Credit repair is a complete examining of an individual's credit report, looking at the root causes of what may be causing credit problems and taking proactive steps and adjusting consumer behavior to clean up the credit history going forward. A general overview of a consumer credit report can be summarized in what is called a FICO score. FICO scores range anywhere from 300 to 850. A score at the lower end will result in higher interest rates from lenders and possibly even outright denial of various credit lines such as mortgages and car loans.

What Affects Credit?

What types of activity show up as black marks on a credit report and what can be done to fix these issues to increase a credit score. Late or missed payments, bankruptcy, foreclosure, charge-offs, liens and legal judgments are all black marks which can result in a lower credit score. These black marks however can be managed with certain levels of success. Having high balances on multiple credit cards, applying for many forms of loans and inaccurate information can also negatively affect a credit score.

Credit Repair Steps

It is actually quite easy for an individual to take proactive steps and alter behavior to help clean up a credit report and improve their FICO score. One of the quickest ways to fix credit is to contest and update any inaccurate or incorrect information on your credit report. If a loan was paid off and you have a receipt showing paid in full but the credit report still shows an outstanding balance that is something that can be fixed.

Another fairly easy step has to do with available credit and applying for new credit. Constantly applying for credit, even if you don't receive store credit cards or other types of loans, show up as inquiries on a credit report. This is a red flag for lenders because it looks like a consumer is actively seeking to increase their debt load. In fact, it's best to do the opposite which means close any accounts you don't need and don't use. If you have ten credit cards but only use two of them, contact the credit card issuers and close the other eight. This shows lenders there is no longer the possibility of racking up substantial debt because there's a reduction in available credit.

One of the things lenders look for when extending credit is that the consumer is consistent in their ability to repay a loan. While it might sound obvious, making monthly payments on time for the correct amount and for an extended period is one of the best ways to repair credit. It shows specifically that as a borrower you take the terms of the agreement seriously and pay on an obligation according to those terms.

Credit Counseling

While most steps can be taken for free by individuals sometimes it is necessary to seek assistance from nationally recognized credit counseling services. These organizations can assist with forming a budget and can often work with creditors to lower monthly payments and reduce interest. The services however are not free and unless you truly need credit counseling it is recommended to try implementing the steps above first.

Some unscrupulous credit repair companies also implement questionable practices for their clients. Some will dispute every negative instance on a customer's credit report knowing that by law lenders must investigate and come to a conclusion from 30 days of receiving the request. Even if the lender is unable to respond within the 30 day window and the black markets removed it will still reappear in the future. These types of companies however in the interim will make it look like they achieved the goal and happily take your money.


Credit repair is not difficult and most of the steps can be implemented for free by consumers. All it takes is a consistent and proactive approach to altering behaviors and focusing on repaying debt every month. Take advantage of the law that was passed and request a free credit report from each of the reporting agencies once a year. Fix any errors that appear on your credit report and minimize any inquiries while making payments on time and your credit problems will become history in no time.

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