financial education

Credit Repair

Woman standing at a train station looking at her phone with a credit score rating icon floating just above the phone's screen.

When it comes to any type of financing (think credit cards, auto loans, mortgages — you get the gist), a borrower’s credit score can significantly impact loan eligibility, terms, and pricing. The Fair Isaac Corporation (FICO) score is the nation’s most popular credit score calculation and is determined based on an individual’s credit profile. Scores commonly range from 300 to 850. In general, a “good” score falls in the range of 690 to 719; the higher the number, the better credit rating (and better chances of keeping cash in your pocket when securing financing).

While the average FICO score in the U.S. has remained 716 since April 2021, not everyone who wants to secure credit falls in this category. Some loans allow for lower scores, but higher scores usually mean better loan terms and rates. For those with low or damaged credit, there’s good news. It is possible to improve credit scores noticeably within a single calendar year.

Here are some steps you can take to help boost your score.

A ding might be a thing. It’s important to review credit reports and make sure all the information is accurate. If there’s an error, contact the associated company and request a correction. If negative information is accurate, time and continued on-time payments on current accounts will be the primary way to decrease the impact of credit dings.

Avoid scams. If it seems too good to be true, it might be. Steer clear of any credit repair companies offering these red-flag promises:

  • a quick fix
  • a new credit identity
  • erasure of bad credit

No man is an island. Many credit repair companies offer helpful support, especially for those who have tried to make changes on their own. To find a reputable company, look for a credit repair specialist that offers:

  • a written contract
  • the ability to cancel without charge within three days
  • an estimate of how long it might take to get results
  • information on any guarantees they offer
  • a list of total fees you’ll pay for their services

Ask for help. For those who create budgets but struggle with follow through, sometimes it’s a good idea to enlist the help of a credit counselor. This person is not emotionally invested in your past decisions or financial status, so they can help you look at things from a different perspective and assist with facilitating positive change. If you’re ready to seek this personalized help, contact us for certified credit counselor referrals in your area.

Come up with a plan. Too much debt can be too much, making it nearly impossible to make on-time payments. A credit counseling agency may suggest implementing a debt management plan (DMP). The agency arranges repayment conditions with creditors on your behalf, and you make a monthly payment directly to the credit agency. Note that utilizing a DMP may impact your ability to secure new credit in the future, so consider discussing it with a certified credit counselor before hopping on board.

Consolidate. Instead of trying to manage multiple debt payments, each carrying a different balance and interest rate, consider consolidating smaller debts into one larger one. With an unsecured personal loan, your rate, monthly payment and repayment schedule will be fixed—you’ll always know what to expect. With a balance transfer card, you can transfer credit card balances to a 0% APR card which usually maintains this rate for 12 to 21 months.

Phone a friend. Consumer credit can be complex, and it never hurts to talk to someone more familiar with the ins and outs. If you have questions or want more information or support for credit repair options, let’s talk.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All loans are subject to loan guidelines and approval.