What Are You Waiting For? 3 Near-Miracle Cures for Bad Credit

An array of solutions to improve your credit score, including a step-by-step guide on fixing a bad credit report in a jiffy.

Here you are, reading this, wondering how to fix that catastrophic credit score.

Sure, I could make you pledge never to make a late payment again, always pay your minimum, and so on. You already know all of that. I could ask you to SWEAR only to use credit cards when absolutely necessary and pay down balances aggressively. I know you tried it all.

You’re here for the hacks—the Cadillac of lousy credit solutions. So grab your coffee, buckle up and read on. Here you’ll learn how to DIY your credit fix with our 3 near-miracle cures for improving bad credit.

1. Switch it up and fix that bad credit score

On two computer screens, a transfer of money is approved between two banks, companies, or accounts. Moving money around to fix a bad credit score.

This is a foolproof trick that can change so much in a flash: by transferring money from one account to another, you can, without a doubt, improve your credit score. But before you do any of this, we need to talk about the difference between revolving and installment credit so you’ll be able to leverage it.

What is revolving credit?

Revolving credit is like your credit card: it means that you have a specific limit of money you have access to, and your minimum payment will fluctuate depending on how much you spend. It also means that when you make a payment, you have access to that money again.

What about installment credit?

Installment credit is like your mortgage or student loans. They require a fixed number of payments over a set period of time. When they’re paid, you’re basically done with them.

Which one is better?

It’s good to have both. A variety of accounts might show that you have good debt-management skills, but remember that installment debt doesn’t affect your credit score as much as revolving debt. And since those loans are usually paid by pre-authorized monthly payments, you can’t forget it. Win-win! You might consider getting an installment loan and use the money to pay off some of your credit card debt to find the sweet spot we’ll be talking about in a minute.

The 30% Rule

Your credit card utilization (CCU) ratio is the amount of credit you have available versus the amount you’re using. Financial experts say it’s better to keep it around 30%, so companies know that you are using the credit you have (which means you have a payment history), but you’re not abusing it. The calculation is pretty easy to do:

Just divide your credit card balance by your credit limit then multiply by 100. For example, let’s say the balance on one of your credit cards is $900, and the limit is $3,000.

$900 / $3,000 x 100 = 30

Congrats, you are at 30%. Which is what you’re aiming for!

So, how do I switch everything?

Try to keep all of your individual revolving credit accounts below 30% CCU.

That means if you have a credit card that’s maxed out and you think the best option is to pay another one off entirely before getting to the next card, think again.

And if you were thinking about cancelling that card after it’s all paid, please reconsider. Scrapping it would reduce the amount of credit you have available to you, which would increase your credit utilization and subsequently lower your credit score.

A good strategy is to balance out your cards. If one card has a balance of $400$ on a $500 limit and another one has a little bit more wiggle room, consider transferring money to the $500 card, so it’s back at $150. It’s not always a good idea to pay off a credit card with another one (advances can lead to more interest), but you can use this tip to manage your future paychecks better.

You could also consider getting a line of credit on an installment loan with lower interest rates and using that to pay for the credit cards and keep them at a 30% CCU ratio.

Another good thing to do would be to try to get your limit increased for a card you already own (but don’t use it). It can be pretty easy if your credit score is not too bad, and if you have been with this institution for a while. It’s always worth a phone call to give it a try. For example, if I have a card with a $500, and the balance is $300, I can call the bank and try to get my limit raised to $1,000 so that I follow the 30% rule.

Just remember that credit scores are based highly on the amount of credit you have available to you, but don’t use.

2. Tonight I’m cleaning up my credit report (a step-by-step guide)

A credit report in a envelope, ready to be reviewed and fixed.

Okay, this one can take some time. But mostly, it takes effort. And it’s also totally worth it.

Wait… What’s the difference between a credit score and a credit report?

As you already know, your credit score is that three-digit number that defines if you’re on the creditor’s nice or naughty list. It will be wildly different depending on who is calculating it based on what’s important for them. The common ground of all of those scores is that they are produced using, as you may have guessed, your credit report! This report is your financial history, and it’s good practice to review it at least once a year. Don’t worry, I’m about to tell you all about it.

Get those credit reports

You may think you have one credit report and that’s it. You don’t. You have two reports, and they may differ greatly. If that’s the case, you’ll have to take action, which I will explain in a minute. By law, you are allowed one free credit report per year (from the two bureaus). You can get both of them using this website and this form.

Considering what you just learned about credit scores, be aware that you will only get your reports, not your score, but some banks allow you to check your actual score for free whenever you want, so make sure to do that, too.

Thoroughly review each item on the list and look out for the following:

Get your highlighter and look for inaccuracies and delinquency. It can go as far as identity theft, or it can just be something incorrect.

The 7-Year Rule

The report needs to go back seven years. Everything that’s older than seven years should be removed from your credit report. But sometimes, they don’t automatically remove it. If it’s older than 7 years, you can quickly get those taken off with an email or a phone call.

Double Accounts

When something’s affecting your credit, it should do so only once, right? Well, as long as your account is in good standing, it stays with the company. If you start defaulting on payments, they will turn it over to a collection agency that will try to get the money from you. At this moment, the account should no longer be with the original company, but sometimes they forget to remove it, creating a double account. So that’s two marks on your credit when it should only be one. This mistake is also pretty easy to correct.

👉 Express collection tip to fix a bad credit score

Incidentally, if one of your accounts is in collection, you can probably contact the debt collector and negotiate a payment that will allow them to delete it from your credit report, too. Don’t just pay in full, say you’ll pay in full as a condition that they remove it from your credit report. This works 95% of the time. Just make sure you request documentation as proof. It’s called a deletion letter, and it allows you to have a backup plan in case the company does not follow through.

Do not pay a dime to debt collectors until they agree to remove all derogatory information from your credit report and give you the documentation.

Strange cards that might be affecting your credit score

Did you check out your credit record and find some debt that isn’t even yours? Do you have some credit cards you didn’t know about? Don’t we all.

First, you need to make sure this is not identity theft. If it is, you’ll need to embark in a dispute with the credit bureaus affected and gather proof that you did not actually use those cards. After you report the fraud, you can work with collection agencies and banks to get everything related to the identity theft removed from your credit reports.

Another less scary option might be that a thousand years ago, you signed up for a credit card without knowing you were signing up for one. I’ll explain:

Once upon a time, it was common practice for cashiers to get you to sign up for a credit card (hello bonuses) so you could get a discount on that cute dress. Sometimes, they didn’t even disclose that it was for a credit card (but the preapproved cards came in the mail a week later 🙃). Even if the card has a $0 balance, it is highly possible that it’s affecting your credit score because it’s not at the 30% sweet spot. Also, what a waste of revolving credit – you know, the one that affects your credit score the most.

Beware that if you keep those cards in your name, in the long run, the company could even turn you over to a collection agency for fees you did not know you agreed to. Yikes.

A quick phone call to the credit company could get that line removed from your credit report forever, at the same time making place for a limit increase on a card you actually use.

Late payments that could be removed from your credit report

Late payments obviously affect your credit score, but what if you didn’t make your payment because you were in the hospital? Isn’t it unfair for this to follow you around for 7 years? Sometimes, you can send the company a letter (especially if you have proof of illness or extenuating conditions), and they will remove the late payment notice. They don’t have to do it, but they will probably do you a favour if you can explain how you’re getting better, or how you’ve always been a good payer besides this. This is called a goodwill letter, and you can find a template to create one here. 👈

Dispute items and wipe your credit clean

By law, you are allowed to dispute any late payments, balances, and even collection accounts on your credit report that you feel are wrong or inaccurate. That way, you can get unnecessary things removed from your credit and clean up your report.

How to resolve an easy credit dispute

If it’s an item that is fairly easy to dispute (like double accounts or something that’s over 7 years), you can do it online through the company’s website, and you should get it removed in under 30 days.

Deal with complex credit disputes like a boss

If the problem is a little harder to deal with and you need to provide proof, it’s always good to do it in writing. Better yet: write it by hand. The reason for this is because if you start a dispute online, you can’t do it again if the decision is not in your favour.

If you are unsure how to format your letter, write it using this template. But whatever template you are using, it’s better to use it as sort of a guide and change it up a bit. This is because credit companies can scan the document and see plagiarism. If they conclude that it is plagiarism, your complaint will be disregarded.

Include copies of documents that support your position: receipts, medical reports, court documents, payment confirmations. Make sure you write your complete name and address and all of the information of the bureau you’re disputing.

Identify each disputed item. State the facts. Request that they remove it (you must make clear what you want them to do about it). You can even include a copy of the credit report with the inaccuracy circled. Keep copies of everything, just in case.

Now, make sure that you send this by registered mail so you’ll know exactly when they receive it. Legally, they have to investigate your claim within 30 days. Then, they must contact you with the results.

If they don’t review it within the 30 days required, it’s actually good news. The, by law, you can get that item removed no matter what. Send all of your proof to the credit bureaus involved and throw yourself a party! 🥳

Now, dispute again

This is part where most people give up. If your previous written dispute got denied, you can dispute again. And again. And again. You need to release your inner Karen and show them how much stronger you are.

But seriously, depending on the reason why the decision was not the one you expected, you can go and provide further proof or explanation. Just add something to the record, like a lawyer building their case.

Really, whatever it is, they’ll most likely give up and remove it.

3. Become an authorized user on someone else’s credit card

On a computer screen, a transaction is authorized on a credit card because someone became an authorized user to fix their bad credit score.

The last thing you can do to improve your credit score almost instantly is to have someone you know with a strong credit history add you to one of their credit cards as an authorized user. The account needs to have been active for the last 2 years minimum. The older, the better. It also needs to have a high credit limit, low balance, and perfect payment history.

The reason for this is that being a user on this card will transplant that account’s positive account history to your credit report.

It needs to be someone responsible. Someone you can trust to keep that good history going, and also… because the primary user is ultimately responsible for every purchase made with that card, it kind of needs to be someone that can trust you, too. Basically, it’s time to call your parents (or your grandparents). Sorry about that.

One thing, though: you need to be careful what card you choose for this. Depending on the companies, some creditors send reports of your behaviour as an authorized user to the credit bureau, and some don’t care about that at all. It would be wise to call the creditor and make sure of that before you go through the process of applying. If the creditor won’t send reports to the credit bureau, well, you’d be doing all of this for nothing!

But if you succeed in getting that coveted authorized user status, your credit score could go up by approximately 100 points.

What if I need a loan with my bad credit score?

If you still need a little help while you’re fixing and improving your bad credit score, we have loans for people with bad credit. Please use this wisely and as a last resort solution only. Also, consider the fact that several short-term loans can damage your credit score more than it can help.

Get your online loan, paperless & fast.

Quick Personal Loans for Canadians :

  • No credit investigation
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Get your online loan, paperless & fast.

Quick Personal Loans for Canadians :

  • No credit investigation
  • No documents required
  • Repay in up to 90 to 120 days
  • $500 short-term loans