8. Check all of your credit reports for errors — then fix them.
You’d be surprised how much damage credit reporting errors can cause to your score. You could have excellent credit but if one of the three credit bureaus has mixed up your account with another person’s or someone has taken out a fraudulent line of credit under your name, you can kiss that nice score goodbye.
Make a habit of getting your free credit report every year from Annualcreditreport.com, where you can download one from each of the three credit bureaus. Each bureau has an easy web form to fill out if you spot any errors or want to contest any information your account.
9. Don’t close old accounts once they’re paid off.
Cutting up your credit card and closing the account may seem like an appropriate way to celebrate after making your last payment, but you won’t do yourself any favors. Credit history factors in your credit score and keeping older accounts open and paid in full shows lenders that you have a long track record of good behavior.
10. Track your progress for free.
Credit scores typically cost money if you buy them from credit bureaus, but a host of sites have recently started letting consumers track them for free. We like CreditKarma, CreditSesame and Credit.com, all of which update scores monthly. It’s fun watching your improvement over time and their estimations won’t hurt your score, since they don’t count as credit inquiries.
11. Stop using credit as a crutch.
Last but not least, the worst thing you can do to improve your credit is take out a bunch MORE credit to cope with your existing financial issues. Not only will new credit inquiries hurt your credit score, but you’ll just wind up digging yourself into a bigger hole than you’re already in.
Bonus: Why not just hire a credit repair company to do all this work for you and call it a day?
Credit repair firms bill themselves as knights in shining armor for people with bad credit, promising to cure their bankruptcy scars and “erase bad credit—100% guaranteed!” In most cases, if you see claims like this, it’s in your best interest to run the other way. Best case scenario: even if the credit repair firm is legit (that’s a big IF), all they are going to do is basically everything we just laid out in this guide but they will charge you dearly for it. Worst case: they are scam artists who will charge you illegal upfront fees and disappear the next time you come knocking. Read up on the warning signs over at the FTC.
The bottom line: Rebuilding credit is a marathon, not a sprint. You won’t get anywhere by pulling the wool over your own eyes and hoping it will disappear, but you can’t expect to do a 180 in a few days either.