Credit repair may immediately impact your credit score in a small way; however, drastic changes in your score will take time. The amount of time depends on the circumstances surrounding your low score. The more drastic the circumstances, such as bankruptcy or foreclosure, the longer they take to overcome. In the meantime, continuing to improve your score in small amounts through credit repair will help your cause.
Factors
The primary factor influencing the length of time it will take to improve your credit is the type of negative information on your report. If your score is low because you are carrying too much debt, you can immediately improve your score by paying off the debt. If your score is low because of missed payments, the negative information will disappear after seven years, depending on your state, but your credit can go up in the meantime if you pay your debts. If, however, the negative information on your report takes drastic debt counseling to fix, such as a bankruptcy or foreclosure, you will be facing a much longer road.
Regulation
Two types of regulations affect the length of time it takes to improve your credit. Regulations limit the statute of limitations on debts. After a given period of time, typically six to 10 years, depending on the debt and state, a lender no longer has a right to attempt to collect from you. If the debt has been handed to a collections agency, the agency does not have a right, either. Always verify the statute of limitations when a lender attempts to collect. If the debt is past the statute, immediately ask to have it removed from your credit score and tell the collector to stop contacting you. The second regulation affecting your improvement time frame is the statute of limitations for information on your report. This is generally between five to 10 years, and it varies state-by-state as well. Many states allow for bankruptcies to stay on a credit report longer than defaults or missed payments. Know your state's laws and contact the credit bureaus if a report is past the statute.
Solution
Take steps to remove incorrect information on your credit report. The Consumer Protection Agency and the Federal Trade Commission both offer solutions to predatory lending and misinformation. Notify your lenders and the credit bureaus in writing if you notice errors, and keep a copy of all communication for your records. If you feel an agency attempting to collect does not have the right to do so, you have the right to request verification of the debt and the agency's right to collect that debt. The agency must respond within 30 days or cease collection. These protections are on the books to help you repair your credit. Use them wisely, and you will be able to boost your score quickly.
Best Practices
While consolidation and settlement can adversely affect your score, a number of best practices in credit repair will improve your score. Time is the best remedy. While you wait, apply the best practices to help boost your recovery. First, pay down your existing debts. Pay down high interest rate debts first, and make all payments on schedule. Second, reduce the amount of credit and debt available to you to an appropriate level. For example, if you have six credit cards totaling a $20,000 limit but only earn $30,000 per year, your score may be suffering. Close high interest rate cards and those you do not often use. Aim for available credit between 10 and 20 percent of your income. Finally, take new debts only if they build your assets. For example, do not take debts to purchase clothing. Instead, take a car loan or a computer loan. Aim to build your net worth through borrowing.
Warning
When you enter credit repair, be sure to avoid taking steps that can adversely affect your score. For example, some credit repair companies advertise consolidation or debt settlement. If you close a loan early through one of these methods, the lender will may report negative information to the credit bureaus. You broke your contract by repaying the debt early. Only take these steps if your lenders agree to report your loans as satisfactorily closed. Further, avoid taking new loans to pay off old loans. This can keep your debt levels high, which will not help improve your credit score.
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