Credit Repair 101: a quick guide

What your score is actually made of

A FICO score is built from five things, roughly in this order of weight:

• Payment history (~35%). Do you pay on time? This is the single biggest factor.
• Amounts owed / utilization (~30%). How much of your available credit you’re using. Lower is better.
• Length of credit history (~15%). Older accounts help — which is why closing your oldest card can backfire.
• Credit mix (~10%). A blend of card and installment accounts.
• New credit / inquiries (~10%). Lots of new applications in a short span ding you.

Start by pulling your reports

Get your reports from all three bureaus at AnnualCreditReport.com — the official free source, not a look-alike that wants a credit card. Read every line. Errors are common: accounts that aren’t yours, wrong balances, a paid collection still showing as unpaid. You have the right to dispute errors for free with each bureau, and fixing a mistake can lift a score fast.

Moves that actually help

• Pay every bill on time, every time. Autopay the minimums so nothing slips.
• Pay balances down below ~30% of each limit — and lower is better. This is often the fastest legitimate gain.
• Don’t close old accounts while you’re trying to build score; age and available credit both help you.
• Don’t open new credit right before a mortgage. New cards or a car loan can drop your score and change your debt-to-income at the worst moment.
• Be patient. On-time months and lower balances compound; most real improvement shows over a few months, not days.

What score do you actually need?

It depends on the loan, and these are typical lender minimums, not guarantees:

• FHA: often 580 for maximum financing (some lenders want more).
• Conventional: generally around 620+.
• VA: no VA-set minimum, but most lenders look for about 620.
• USDA: usually 640 for streamlined approval.

If down payment is also a hurdle, the down payment assistance programs have their own credit minimums worth knowing.

Watch out for credit-repair scams

You can do everything a “credit repair company” does yourself, for free. Be skeptical of anyone who charges before doing anything (illegal under federal law), promises to remove accurate, negative information (they can’t), or tells you to dispute true items or create a new credit identity. Legitimate help exists — HUD-approved housing counselors and nonprofit credit counseling — but nobody can erase a real, on-time-late history faster than time and good habits.