Experian considers a credit score of 670 or above “good.” When you fall below 670, you enter “fair” territory. Once your credit score drops below 580, lenders classify it as “poor.” While you can always do things to improve your credit score, you should make taking action a priority in the fair-to-poor range.

Even though NerdWallet defines “bad” credit as a score between 300 and 629, you’re probably doing yourself a favor to think of fair-to-poor credit as “bad” credit. It’s all about being proactive. Acting early and often to ensure you keep your credit score as high as possible because the better your credit, the more favorable terms you’ll see on credit cards and most types of loans.

In this article, we discuss several things you can do -- on your own -- to improve and repair bad credit.

Get Your Free Credit Report

First, you have to know where you stand. This is the simple part. Every year, each of the three major credit bureaus must provide consumers a free copy of their credit report. All you have to do is go to annualcreditreport.com to get yours.

Once it’s in your possession, scour your credit report to see where you might have gone wrong. Search for errors. Create a plan to both attack issues you uncover and use credit wisely responsibly going forward. We’ll help you get started on that in the sections that follow.

Avoid Credit Repair Companies

Credit repair companies tend to make promises and charge handsomely for the prospect that they might be able to follow through. There is nothing a credit repair company can do to help rebuild and repair bad credit that you can’t do yourself with a little research, time, and effort.

That said, it might be wise to use a credit monitoring service. After you secure your free credit report(s), you likely receive an offer to obtain your credit score (good idea) and enroll in a service that will alert you to changes on your credit report.

While this isn’t essential to repairing your credit, it can be helpful. You’re essentially paying for a third party to keep an eye on things for you, alert you when something’s up, and help facilitate processes such as disputes. You’ll also receive education on how to improve and maintain your credit score.

Approach Creditors Yourself

Unless you’re in a dire situation (filing bankruptcy or facing debt collection lawsuits), you probably don’t need someone to contact your creditors on your behalf.

If you see something mislabeled on your credit report or, equally as important, you are or fear getting behind on your debt payments, contact your creditor. Explain the situation. If necessary, ask for help. In most cases, they’ll respond like reasonable people and try to work with you.

You can be proactive yourself; you don’t need to pay a credit repair agency exorbitant amounts of money to do it for you.

Pay Down Debt

According to The Fair Isaac Corporation, the company that created the FICO score, the amount of debt you carry accounts for about 30% of your credit score. Owing a lot doesn’t necessarily ding your score. However, if you’re using considerable portions of your available credit you might be giving off signs that you’re overextended.

Generally, it’s not a bad idea to pay down debt. It should help improve your score, but, just as important, it will lower your monthly obligation. The less you have to shell out each month, the less likely you are to fall behind.

Make Your Payments On Time

Payment history makes up roughly 35% of your FICO credit score. So, make your payments on time. And, it bears repeating, ask for help if you’re behind or think you’re about to fall behind.

According to Equifax, if you have a 680 credit score and go 90 days late on a two-year-old credit card account and 30 days late on a one-year-old auto loan, you can expect your credit score to drop by about 70 points. The longer you’re delinquent, the greater the impact on your credit.

You can take steps to repair your credit by keeping current on your accounts. If you bring your late accounts current, you might not earn back all of the points you lost, but you’ll most likely see your credit score improve, all else equal.

Resources

https://www.experian.com/blogs/ask-experian/what-is-the-average-credit-score-in-the-u-s/ https://www.myfico.com/resources/credit-education/whats-in-your-credit-score https://blog.equifax.com/credit/can-one-late-payment-affect-my-credit-score/