January 07, 2015

By Jess Bedsole

Have you seen those ads of companies offering to remove bad credit information from your credit report? Unfortunately there is not a quick fix to remove what is accurately reported.

In order to repair your credit, you need to understand how credit works.

The first step is to know what is in your credit report. You have the right to obtain a free copy of your credit report (from each credit reporting agency) once a year. Simply visit www.annualcreditreport.com to download your copy and review it in detail. You can request your credit report from all 3 credit reporting agencies at once or if you prefer, you can monitor your information by requesting a copy of your credit report once every 4 months.

The second step is to understand your credit score. Lenders use credit scores to determine who qualifies for a loan, what interest rate and at what amount. In some cases, it can also be used to determine insurance rates, rent an apartment, have telephone or other utilities connected, and even land a job. Most lenders do not divulge which scoring models they are using. Alliant members are eligible to receive VantageScore 3.0 free of charge.

The VantageScore was created in collaboration with the three major credit bureaus: Equifax, Experian, and TransUnion it is offered to you free of charge through Alliant’s Online Banking. This score is updated every quarter.

If you score is lower than what you expected, here are some tips to help you repair that credit score:

  1. Pay your bills on time. Utilizing services like Bill Pay through Alliant Online Banking or auto-debit through certain credit card or utility companies will show you can pay your bills on-time and increase your credit score over time. The only catch with these services is you have to be certain you have the money in your account when the funds are withdrawn. Otherwise you could get assessed late fees from the financial institution.
  2. Don’t max your credit limit. You may have a credit limit of $10,000, but don’t use it all! Showing restraint when it comes to spending gives creditors faith that you are responsible and they’ll be more likely to lend to you or increase your line of credit in a time of need. Try not to charge more than what you can pay back each month. Having a lot of credit available to you is great; using as little as possible is better.
  3. Keep all you accounts current. Any outstanding balances you have with other accounts or creditors need to be paid off as quickly as possible for your credit to begin to be repaired. Know that simply paying off past due balances will not remove them from your credit report, but will help your score increase over time. Less debt equals a higher credit score.
  4. Seek professional help. If you feel like you are in over your head and don’t think you can start this journey alone, call a professional to help you. Members of Alliant, are eligible to take advantage of GreenPath Debt Solutions, one of the industry’s most respected financial counseling programs – for free.

Repairing your credit is a long process, but it is a rewarding one! Start today and kick your New Year off on the right foot.