7 Ways to Reverse a Bad Credit Score

If you have bad credit be encouraged you can have good credit, if you want it.

Having a “prime” credit score can make a significant beneficial difference in your life. Non-prime credit scores will result in limited more expensive borrowing options, if available at all.

Borrowing from time to time is a reality and necessity  of modern financial life. Short-term borrowing costs impact your long-term financial well-being. Your ability to minimize those costs is based on your financial capability. In this adversarial economic system, you can either "play the game" or "be played by the game."

Credit heals itself. If you do nothing on your credit for the next 7 years you will have a clean credit report by law. The only exception would be the 10 years required for a Chapter 7 bankruptcy to clear. But just waiting for the bad news to fall off your report isn’t good enough. You also need to engage the system for your benefit.

Actual Credit Score Improvement Graph

But before we begin let’s reel in expectations.

• Starting Point
  • It depends where you are starting from. Is your nonprime score 450 or 610 or 725?  Beijing to Hong Kong is a different journey than Paris to Hong Kong.
• Time
  • You didn’t wreck your credit overnight. You can’t fix it overnight either. You can materially shorten the time it takes to recover, if you know what your are doing. You need to develop patience. It is going to take time.
• It’s easier said than done.
  • However, it can be done.  Just like any other behavior change, it’s only as hard as you make it.
• It requires persistence and commitment.
  • Your journey to a good credit score will not be a smooth straight line up. You may have some setbacks. So what? Get up. Move on.
• It helps to have some money available for leverage in negotiations with creditors.​

​If you are still with me, Here are 7 strategies to comeback from a bad credit score.

• Tithe
  • Be generous even with limited resources. You need to get some kind of Karma, ‘what goes around, comes around,’ cosmic reciprocity flow working toward you. Most religions, more or less, agree on this.
  • If you have a bad credit score when it comes to the economic system you are pretty much persona non-grata. You have no favors coming your way. In most cases, things will be a magnitude more difficult and expensive. Get God on your side, however you believe.
  • There is overwhelming anecdotal evidence in the African-American Christian community regarding miracles and other divine money interventions both large and small.
  • Money among other things is a medium of transaction. Bible has plenty to say on money in both the Old and New Testaments. In Malachi and 2 Corinthians God challenges those that want Him involved in their money life to prove him with money by giving. When you give you position yourself to receive. "Pay it forward," and all, you know.
• Stop digging
  • As mentioned before if inactive your credit report will clean itself of all bad tradelines in seven years. The key point to understand is the the Date of Last Activity (DLA.)
  • You have to drive a stake in the ground and stop putting bad news on your report. That means you have to
    • Pay all bills on time, every time, all the time
    • Negotiate settlement agreements and payment plans that increase your chances of success. They will need to simultaneously maximize your funds and reverse credit score damage. A stout but achievable goal.
• Put some good news on your report
  • You need to start getting good news on your credit report. One way to do this to ask anybody you pay regularly to report to the credit bureau. That could be a landlord, cell phone carrier, bodega, and other non-traditional credit. You may get some push back because it can cost a creditor to report.
  • Borrow some money and have it report your on time payments to the credit bureaus. If your credit is really bad, you are going to have to borrow the money from yourself. This is done with secure credit cards and share savings or passbook loans. The sooner you start, the better.
• Credit scoring is often counter intuitive; so educate yourself
  • Just paying your bills on time will not ensure you a good credit score. The other factors that impact your score make up 65% of its total. Proper management of those factors will result in “prime” credit scores.
  • There is a lot of credit information available to you. Check out our blog for relevant articles. You can search Google for topics. Use apps that provide scores. Remember free isn’t always free. You are the product. Your data is being monetized.
  • If you still have any, many credit cards accounts provide monthly credit scores.
• Manage your credit score on purpose
  • 7 ways to improve your credit score on purpose
• Stabilize your income
  • The biggest cause for financial stress for working class families is income insecurity. The nature of work today exposes many families to income volatility. Throw in the occasional “life happens” and you can spend all of YOU catching up. Rather than being able to use your gifts and capacities to get ahead.
  • You have to find a way to smooth it out from other sources. Side hustles, entrepreneurship, promotion, Ujamaa and Ujima. You need to diversity and increase autonomy over your sources of income.
  • Consider whether you want a lifestyle business versus an employment engine that creates profits and jobs.
• Beg for mercy This works best with accounts that have been paid but still negatively impact your score.
  • Contact each derogatory tradeline reporting company.
    • Try to find the name of the person that holds the title you are asking to make the decision and address your request to that person
    • Write a snail mail letter (handwritten only if you have GREAT penmanship) requesting that they remove the bad information. Acknowledge it is their prerogative to do so or not.
    • Hand address the envelope
    • Use a personalized return address sticker
    • Mail (first class will do)
  • Wait and then wait some more, at least 60 days
  • Check credit report to see results
  • Resend letters to those accounts that didn't come off.
  • Wash, rinse, repeat.

Begging Letter

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Author

Mansa Musa is a homeownership counselor and homebuyer educator. He is currently the Principal at MoneySmartLife.org. He blogs and speaks on subjects of financial well-being and financial capability. Helping working class families live a sustainable MoneySmartLife through pragmatic solutions and behavior changes.