Credit Building Tips

Are you trying to improve your credit score but have been held back by an eviction notice on your credit report? If so, you are not alone.

Solution iconAn eviction can be a major obstacle to building a strong credit history and can stay on your credit report for up to seven years.

However, there are ways to remove the eviction from your credit report and get your credit back on track. In this blog post, we'll discuss the step-by-step process of how to remove evictions from your credit report.

Find Out If You Have An Eviction Notice on Your Credit Report

You may not even know that there's an eviction notice on your credit report until you need to find a new place to rent. Even then, it may not occur to you that your credit report is telling your prospective landlord about your difficulties with a past landlord.

Solution iconIf you do think you may have an eviction notice on your credit report, the first step is to check your credit score and review your report.

It's a good idea to get a copy of your credit report from each of the three major credit bureaus — Equifax, Experian, and TransUnion — as they often contain different information.

Requesting Copy of Credit Report

An eviction notice can appear in several places on your credit report. To find out if you have an eviction notice, you'll want to look for the notice under the section that lists "Public Records." Here, you'll be able to see whether you have any unpaid evictions or judgments listed on your report.

If you have an eviction notice on your credit report, it can significantly lower your credit score. It can also prevent you from renting a home or apartment. Fortunately, you can take steps to remove an eviction notice from your credit report.

It's important to know that even if you paid off the eviction in full, it might still appear on your report for up to seven years. Once you've determined whether or not you have an eviction notice on your credit report, you can take the necessary steps to get it removed.

Reasons Landlords Evict Tenants

Landlords may evict tenants for many reasons. The most common reason is failure to pay rent. Tenants are legally obligated to pay rent on time, and if they do not, they may be subject to eviction.

Other reasons include violations of the rental agreement, engaging in illegal activities in the unit, damaging the property, or nuisance behaviors like loud music or partying late into the night. Eviction may also occur if the tenant does not comply with local or state laws related to health and safety. Finally, a landlord may choose to evict a tenant due to personal differences.

Landlords must also follow strict procedures when attempting to evict tenants. It's important to understand that each state has different regulations regarding evictions, so it's essential to familiarize yourself with your local laws if you are concerned about being evicted.

An Eviction Notice

A few resources are available for renters who want to better understand the laws surrounding evictions in their state. Every state has its own laws and rules when it comes to evictions, and these can be found online at various state government websites.

To find out more information, renters should visit their state's website to read through the different eviction statutes. The National Conference of State Legislatures provides an overview of state-by-state eviction laws on its website.

It is important to note that some states have limited rights for tenants when it comes to evictions. For example, some states don't allow for tenant counterclaims or defenses, while others may require landlords to offer a settlement agreement before evicting a tenant.

Additionally, renters should familiarize themselves with the Fair Housing Act, which is the federal law that protects tenants from discrimination based on race, color, national origin, religion, sex, familial status, or disability. It's important to know your rights under this law as well as any state-specific laws regarding evictions.

Many legal aid organizations across the country provide assistance and legal advice to tenants who are facing eviction. Legal aid organizations are typically staffed by volunteer lawyers and paralegals who are experienced in tenant-landlord law and can help tenants better understand their rights in relation to evictions.

How Many Points Does an Eviction Report Lower a Credit Score?

The amount that an eviction report on your credit report lowers your credit score will depend on several factors. Generally, an eviction report can cause a drop in your credit score of up to 100 points or more.

This can be especially damaging for people with low credit scores. Additionally, the more recent the eviction report is, the more it can affect your score. It is important to keep in mind that credit scores are not static and can change over time as you make positive financial decisions, such as paying bills on time and reducing debt.

Woman Reading Credit Report

If you find out that you have an eviction report on your credit report, it is essential to contact the landlord who reported the eviction and ask them to remove the report from your credit file. If the landlord agrees, then the eviction report will be removed from your credit report, and your credit score should begin to improve.

It's possible that a landlord or management company may have reported an eviction to the credit bureaus without obtaining a court judgment. If this happens, it can still appear on your credit report and negatively impact your score.

If they fail to do this, then the tenant may have the right to challenge the eviction in court. If an eviction order is issued against the tenant, it will show up on their credit report as a negative item, thus lowering their credit score.

Even if the landlord refuses to remove the eviction report, there are still steps you can take to improve your credit score, such as making sure that all of your other debts are current and up-to-date.

Steps to Remove an Eviction Notice From Your Credit Report

The steps you'll need to follow in order to remove an eviction notice from your credit report differ depending on whether the report is accurate or inaccurate. Making sure the eviction notice is accurate is as easy as checking your credit report, as we mentioned above.

Free Credit Report Request

Go here to get a free copy of your credit report from the three credit bureaus and find out whether or not there are any eviction notices on your report.

How to Deal with Inaccurate Eviction Notices on Your Credit Report

If you find an eviction notice on your credit report, but you know it shouldn't be there, there are a few things you can do to fix the situation.

1. If the eviction is incorrect, you should contact the landlord or property management company and ask them to provide written documentation that the eviction never happened. You should also obtain a copy of your rental agreement if possible. This can be used as proof that you were never legally evicted.

2. Once you have gathered all of this information, you should contact the three major credit bureaus and file a dispute letter.

3. The credit bureau will then investigate the claim and contact the landlord or property management company for further evidence. If the eviction is found to be inaccurate, it should be removed from your credit report.

Make sure all the information on your report is accurate, including the dates and amounts involved. Include supporting documentation, such as a copy of your lease agreement and any court documents. If the information is inaccurate, contact the creditor involved and ask them to correct any mistakes.

You'll need to attach copies of the documentation of payment, such as a copy of the check you sent, bank statements, or a receipt from the landlord. The credit bureau will investigate and determine if the eviction was due to an honest mistake or a valid one.

A Credit Report

4. If the dispute is successful, the creditor must update the records with the correct information and notify all three credit bureaus (Equifax, Experian, and TransUnion) of the change. Once updated, any late payments associated with the eviction should no longer appear on your credit report, and your score should improve accordingly.

5. If the credit bureau denies your dispute or fails to investigate, you can contact a consumer law attorney and ask for assistance. A lawyer can help you understand how to navigate the legal system and determine whether or not you may be able to get the eviction removed through legal action.

An attorney may be able to help you dispute the eviction notice more successfully or even sue the landlord if necessary if you feel like the eviction was done unfairly or illegally. They can guide you through the process of suing the landlord for damages related to unfair treatment.

6. Contacting a credit repair agency may also be worthwhile if you need help disputing the eviction. These companies often deal with credit errors and can help you correct them quickly.

How to Deal with Accurate Eviction Notices on Your Credit Report

Unfortunately, sometimes eviction notices are accurate and do appear on your credit report. Even if this is the case, you can do a few things to make things better.

Send a Goodwill Letter

One way to remove an eviction from your credit report is through a goodwill letter. This involves writing to the landlord or management company and asking them to remove the eviction notice on your credit report. They may or may not be willing to accept this request, but if they do, then they must update the records accordingly and alert the credit bureaus.

A Goodwill Letter

However, even if the creditor agrees to delete the negative items from your report, the account itself will still appear on the report. Therefore, it is best to use this method only if you feel confident that you can prove the account was handled incorrectly.

Request a Repayment Plan

You may be able to work out a repayment plan with the landlord who evicted you in order to have the eviction notice removed from your credit report.

A Repayment Plan

You may also be able to get the eviction notice removed from your credit report by making on-time rental payments for at least 12 months after the eviction.

Send a Letter to Each Credit Bureau

While sending a dispute letter helps when the information on your credit report is inaccurate, you can also send a letter to each credit bureau that provides evidence that you had a good reason for being evicted and/or that the eviction was not your fault.

Writing a Letter to the Credit Bureaus

For example, if you were evicted due to an inability to pay rent due to a sudden job loss or another unexpected financial difficulty, you can provide documentation of the event to the credit bureau.

Seek Credit Counseling

One of the best places ways to get help with your credit report is to contact a credit counseling agency or a credit repair company.

Working With a Credit Counselor

These organizations can provide valuable insight into what you need to do in order to remove the eviction notice from your credit report. They may even be able to negotiate with the landlord or collection agency that reported the eviction.

Improve Your Score Elsewhere

Finally, if you're unable to get a valid eviction notice removed from your credit report, make sure to focus on other aspects of your credit report that show responsible financial behavior.

Person Improving Their Credit Score

A good payment history, a low debt-to-income ratio, and a steady income can help offset an eviction notice and improve your credit score over time.

Renting With an Eviction Notice on Your Credit Report

You may need to work a little harder to find a landlord or property management company willing to overlook an eviction notice on your credit report. In the U.S., the Fair Credit Reporting Act states that landlords cannot deny a tenancy based solely on a tenant's credit report. However, if there is an eviction on your record, landlords are allowed to take that into consideration.

It is important to note that some states have laws protecting tenants from being denied a rental because of an eviction, so research your state's ruling on this issue.

Renting a Property

One option is to provide additional documentation, such as pay stubs or bank statements showing that you are financially stable and responsible. You should also be prepared to explain the circumstances of the eviction, such as extenuating financial hardships or other mitigating factors.

It helps to provide references from past landlords and employers that can vouch for you as a tenant. You may also consider finding a cosigner for the rental agreement with strong credit who can agree to pay the rent if you cannot do so. Also, try searching for a "second chance" apartment complex that is more lenient about credit checks and allows renters with evictions.

Finally, if you're having trouble understanding how credit works and how to repair your credit score, subscribe to our free credit-building tips newsletter. You'll get information, guides, and tutorials on how to fix your bad credit, increase your credit faster than you realized possible, and even achieve a high credit score.

As of this month, there are 212 companies offering credit cards. But if your credit score is fair or poor, it may take a lot of work to get approved for one.

With low fees, store credit cards can be a great way to build credit if you are trying to establish credit or rebuild credit if your score has taken a hit for whatever reason. That's just one perk of getting a store credit card. Most store cards offer retailer discounts and membership perks.

When it comes to department stores, even though their numbers may be dropping across the country, they are still the anchor stores in many malls. And along with offering a wide range of products from fashion and fragrance to bedding and bath sets, almost all department stores also offer store credit cards.

The two most common store cards are "open- and closed-loop" cards.

Although store cards have a reputation for inflicting high-interest rates and hidden rates on their customers, they can offer special financing on big purchases and let you earn rewards and discounts at your favorite store.

Solution iconTo help you make decisions before you reach the checkout aisle, we've compiled a list of the best store credit cards to get, even if your credit score is under 600!

TJX Rewards® Platinum Mastercard®

Card details: The TJX Rewards® Platinum Mastercard® can be used at T.J. Maxx, Marshalls, HomeGoods, Sierra Trading Post, and Homesense. It's ideal if you often shop at this family of stores, but it can be used anywhere Mastercard is accepted.

TJX Rewards Platinum Mastercard

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Bloomingdale's Credit Card

Card details: This card is worth considering if you plan to spend up to $1,667 at the store in the first two days of having the card, as you can earn 15% off all purchases. The discounted savings is capped at $250.

Bloomingdale's Credit Card

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Kohl's Credit Card

Card details: You can qualify for the Kohl's Credit Card with a lower-than-fair credit card score if your income, debt load, opening of accounts, employment, and housing status are higher.

Kohl's Credit Card

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JCPenney Credit Card

Card details: The JC Penney credit card is a department store credit card that can only be used at JC Penney. It doubles the rewards rate of a standard JCPenney rewards member.

JCPenney Credit Card

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Macy's Credit Card

Card details: Citibank, N.A. issues the Macy's credit card that can be used at Macy's, Macy's Backstage, and macys.com. It's available in four levels — Bronze, Silver, Gold, and Platinum, each with increasing benefits.

Macy's Credit Card

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Montgomery Ward Retail Card

Card details: The Montgomery Ward retail card is an unsecured store credit card that even people with bad credit can get. They report to the credit bureaus monthly, so if you make on-time payments and have a reasonable credit utilization rate, you'll be able to build a positive credit history.

Montgomery Ward Retail Card

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My BJ's Perks® Mastercard®

Card details: The BJ's Perks® Mastercard® lets you add authorized buyers to share your credit card and membership number. One authorized buyer can be added when you apply for the card, and three additional authorized buyers can be added once your account is opened.

My BJs Perks Mastercard

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Although not technically department stores, these four stores (big box, home improvement, catalog/online retailer, and clothing store) will also extend credit to those with lower or bad credit scores.

Capital One® Walmart Store Card

Card details: If a significant amount of your shopping for groceries, garden supplies, new clothes, or other everyday items is done online at Walmart, the Capital One® Walmart credit card provides great rewards.

Capital One Walmart Store Card

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Lowe's Advantage Card

Card details: This in-house store credit card can only be used at Lowe's, a home improvement retailer that sells building supplies, hard finishes, and appliances.

Lowe's Advantage Card

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Fingerhut Credit Account

Card details: This is the store credit card that's easiest to qualify for with bad credit. Not technically a department store; it's an online retailer/mail catalog store.

Fingerhut Credit Account

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Old Navy Credit Card

Card details: The Old Navy credit card can be used at Old Navy, Gap, Banana Republic, and Athleta. When you shop at two or more of these stores, you can earn up to 2,000 bonus points.

Old Navy Credit Card

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Other Credit Card Options for Bad Credit

When your credit score is lower than you'd like it to be and you can't find a department credit card that suits your style, two other types of credit cards may extend your credit and help you build up a higher credit score.

Credit Card Options

Secured credit cards

In the main, secured credit cards work like conventional credit cards. The main difference is that secured credit cards require you to give an upfront cash deposit that acts as collateral against the card's future use.

Student credit cards

Student credit cards are a great first step to building credit as they don't rely on someone's previous credit history or income before approving the card. Most student credit cards don't offer rewards, but the SCENE® Visa* card for students and the L'earn® Visa* card do.

The SCENE card lets you earn five Scene+ Points for every $1 spent in Cineplex cinemas and one Scene+ Point for every dollar spent elsewhere. Using the L'earn card lets you earn 1% money back on all "eligible" purchases.

How to Improve A Bad Credit Score

1. Keep an eye on your credit report.

Credit bureaus update information sent by lenders every 30-45 days. If any changes are made to your financial behavior, like how many credit accounts you have and your payment history, your report will reflect the updated information.

Due to COVID-19, AnnualCreditReport allows you to get your credit report for free until the end of 2023. After that, you'll be able to check your report for free once a year.

Annual Credit Report Request Page

It's important to check your credit report for errors, as these can negatively impact your score. It also benefits you by helping you understand what future lenders see and what specific activities (how you pay your bills, what types of credit you use, your credit utilization ratio, etc.) you need to do to improve your score.

2. Pay your bills in full and on time.

How you pay your bills — your payment history — makes up 35% of how your credit score is calculated. This is why it's important to pay all your bills on time. The more on-time payments you make, the higher your credit score will be.

Payment history considers if you pay your bills on time, if and how often you miss a payment due date, how far past the due date your payment was made, and how long it's been since you missed one or more of your payments.

Calculating Bill Payments

Of course, paying your credit card bills fully helps your credit health. To create a healthy credit report, you need to make at least the minimum payment on each credit card.

But if that's all you pay, you will incur hefty interest charges on top of any unpaid balance you owe. The cost of one $30 sweatshirt, if you make only minimum payments over a year, can end up costing you $300+ by the time you've paid it off in full.

Repaying your balance in full and on time every time is one of the best ways you can move a low credit score to a higher one. This will make you a more attractive loan recipient from lenders offering you better borrowing terms.

3. Consolidate your debts into one loan.

When working hard to improve your credit score, you may want to consolidate your credit card debts if you have multiple cards with high balances you find difficult to pay off.

Paying Off Credit Card

For example, if you have four credit cards with varying balances between $800 and $1,400, you may need help remembering to make the four separate payments on time. A consolidation loan to cover the entire credit card debt amount would let you have one single amount owing at a lower APR, which will lower the interest you'll have to pay.

4. Call your credit card lender.

This may not seem obvious, but calling your credit card company can change how your credit mistakes are reported to the three main credit bureaus — Experian, TransUnion, and Equifax.

Yes, you'll need to go through the painful phone tree or wait endlessly on hold while you listen to elevator music, but remembering that a single late payment can cause your credit score to drop by 90-110 points should help ease the irritation.

Calling Credit Card Lender

Once you get through to a human being, an honest and reasonable explanation for why you were late (your payment was made by mistake) can set the stage for them to extend a little bit of helpful mercy. Tell them you're doing everything you can to build a good credit report, and ask if they would consider removing the late payment from your record.

A polite and sincere request can help your case and, along with a commitment to developing good credit habits in the future, should move your credit score in the right direction.

If you need to rebuild your credit, you're not alone. In 2022, 15.5% (39.28 million) of Americans have bad credit, and 21.7% (54.99 million) have fair credit.

While that may seem like a lot — 94.27 million people combined, the good news is that the percentage of Americans with good credit increased by 5% year-over-year this year.

That's the highest year-over-year increase in 16 years!

Solution iconOne of the ways to rebuild your credit is by working with a second-chance credit union. They're a great way to get a fresh start at rebuilding your banking history.

Second chance bank accounts are "individual accounts offered at some…credit unions to help people with a troubled banking history." Troubled banking history may mean your bank account has been closed due to excessive overdrafts, unpaid fees, or other issues.

Unbanked and Underbanked

If a bank closes your account for one of these reasons, you may be put on a list at ChexSystems, which is a "bank account screening consumer reporting agency (C.R.A.) that keeps your name on file for up to five years as a high-risk bank customer."

Solution iconShockingly, millions of Americans do not have a bank account. The Federal Deposit Insurance Corporation (FDIC) reports that 22% (63 million) of American adults were "unbanked" or "underbanked" in 2019.

Unbanked Americans (6%) have no bank account whatsoever. Without a bank account, you have to rely on payday loans, check cashing services, money orders, foreign remittances, and pawnshop loans to manage your finances. Even the "underbanked" need to rely on alternative financial services.

The most recent survey from the FDIC asked households that didn't have full access to bank services why this was the case.

Just over 52% said they didn't have enough money to keep in an account, while 30% claimed they didn't trust banks.

Being unbanked (or underbanked) isn't just an inconvenience. NerdWallet calculated the annual cost of being unbanked at 1% of the average annual income. While 1% doesn't sound like much, over a lifetime, it can add up to $70,000.

Those who are unbanked and need to rely on "alternative services" like payday loans are vulnerable to "predatory lenders, exorbitant interest rates, and costly fees." Not only that, it's impossible to get approved for loans and mortgages, which every American needs in order to improve their financial situation.

The direct costs for the unbanked are significant. Without a bank account, they can't pay bills electronically and need to rely on cash payments. Imagine the inconvenience, at the very least, of not having access to a bank account!

An Unbanked Person

Direct costs of being unbanked are:

Some of the challenges that come without access to credit include:

How Does Second Chance Banking Work?

Second-chance bank accounts are typically checking accounts, although some credit unions may also offer second-chance savings accounts.

Solution iconAnother way to think of a second chance bank account is as a probationary account. They're intended to help people rebuild their banking history and reputation as low-risk customers. Similar to how secured credit cards can help people build their credit history.

Second-chance checking accounts are relatively easy to get, and some credit unions work with their clients to help them move to "more robust banking options." They operate like other checking accounts but usually have more restrictions, higher fees, and limited features.

And they're not available everywhere. They may be called "Opportunity Checking" or "Fresh Start Checking." If no credit unions in your town or city offer this service, you may want to check with a local community bank.

Using Second Chance Banking

Forbes Advisor collated a list of second-chance checking credit unions by state:

State Bank 1 Bank 2 Bank 3 Bank 4
Alabama Azalea City Credit Union Opportunity Draft Family Security Credit Union Give Me a Break Checking Gulf Winds Credit Union MyOpportunity Checking
Alaska True North Federal Credit Union True Options Checking
Arizona Banner Federal Credit Union Opportunity Checking Copper State Credit Union Try Again Checking MariSol Federal Credit Union Start Again Checking Tucson Old Pueblo Credit Union Mission Checking
Arkansas Red River Credit Union Fresh Start Checking River Valley Community Federal Credit Union Fresh Start Checking Unify Federal Credit Union Right Start Checking
California North County Credit Union Fresh Start Checking Premier America Credit Union Fresh Start Checking Priority One Credit Union New Leaf Checking Strata Credit Union Fresh Start Checking
Colorado NuVista Federal Credit Union The Last Chance Checking Unify Federal Credit Union Right Start Checking
Connecticut Finex Credit Union Re-Start Checking Hartford Federal Credit Union 2nd Chance Checking Tobacco Valley Teachers Federal Credit Union myChance Checking
Florida Compass Financial Federal Credit Union Restart Checking First Florida Credit Union Smart Track Checking Gold Coast Federal Credit Union Fresh Start Checking South Florida Federal Credit Union Aspire Checking
Georgia Georgia's Own Credit Union Resolution Checking Health Center Credit Union Fresh Start Checking Peach State Federal Credit Union Fresh Start Checking
Idaho Latah Credit Union Second Chance Checking
Illinois Catholic & Community Credit Union Rebound Checking
Indiana Centra Credit Union Opportunity Checking Heritage Federal Credit Union 2nd Chance Checking Liberty Federal Credit Union Opportunity Checking
Iowa Collins Community Credit Union Take2 Checking Greater Iowa Credit Union Fresh Start Checking North Iowa Community Credit Union Fresh Start Debit
Kansas United Consumers Credit Union Second Chance Checking
Kentucky Liberty Federal Credit Union Opportunity Checking
Louisiana Neighbors Federal Credit Union Basic Checking Pelican State Credit Union Horizon Checking Southwest Louisiana Credit Union Fresh Start Checking
Maine Five County Credit Union Second Chance Checking
Maryland Central Credit Union of Maryland Renew Checking Market U.S.A. Federal Credit Union Fresh Start Checking Security Plus Federal Credit Union Revive Checking
Massachusetts Alden Credit Union No Boundaries Checking Athol Credit Union Fresh Start Checking
Michigan Marshall Community Credit Union Fresh Start Checking Michigan State University Federal Credit Union Rebuild Checking
Minnesota Minnesota Valley Federal Credit Union Second Chance Checking
Mississippi Gulf Coast Community Federal Credit Union New Chance Checking Liberty Federal Credit Union Opportunity Checking MUNA Federal Credit Union Fresh Start Checking
Missouri St. Louis Community Credit Union Second Chance Checking United Consumers Credit Union Second Chance Checking
Montana Clearwater Credit Union SmartSpend Checking Valley Credit Union Opportunity Checking
Nevada Clark County Credit Union CheckAgain Checking WestStar Credit Union Fresh Start Checking
New Jersey Credit Union of New Jersey Right Turn Checking Jersey Shore Federal Credit Union Fresh Start Checking United Teletech Financial Federal Credit Union Fresh Start Checking
New York Adirondack Regional Federal Credit Union Free New Beginnings Checking Alternatives Federal Credit Union Fresh Start Checking Centra Credit Union Opportunity Checking Financial Trust Federal Credit Union 2nd Chance Checking
North Carolina Centra Credit Union Opportunity Checking Excite Credit Union Fresh Start Checking Skyla Credit Union Fresh Start Checking
Ohio Buckeye State Credit Union Second Chance Checking Eaton Family Credit Union, Inc. Second Chance Checking Hopewell Federal Credit Union Rebound Checking Kemba Federal Credit Union Fresh Start Checking
Oklahoma Allegiance Credit Union Second Chance Checking Oklahoma Educators Credit Union Fresh Start Checking Weokie Federal Credit Union Fresh Start Checking Western Sun Federal Credit Union Fresh Start Checking
Oregon Heritage Grove Federal Credit Union Fresh Start Checking Point West Credit Union Fresh Start Checking
Pennsylvania Centra Credit Union Opportunity Checking Utilities Employees Credit Union Green Light Checking West Branch Valley Federal Credit Union Back on Track Checking
South Carolina Carolina Trust Federal Credit Union Encore Checking Market U.S.A. Federal Credit Union Fresh Start Checking Skyla Credit Union Fresh Start Checking
Tennessee Liberty Federal Credit Union Opportunity Checking Hearthside Bank Square One Checking Select Seven Credit Union Second Chance Checking
Texas Associated Credit Union of Texas 180 Checking Baptist Credit Union Draft Builder Checking Kelly Community Federal Credit Union Smart Choice Checking Prestige Community Credit Union Fresh Start Checking
Utah American United Federal Credit Union Fresh Start Checking Cyprus Credit Union Fresh Start Checking
Virginia Central Virginia Federal Credit Union Fresh Start Checking Healthcare Systems Federal Credit Union Renew Checking Member One Federal Credit Union Smart Choice Checking
Washington MountainCrest Credit Union Fresh Start Checking
West Virginia West Virginia Federal Credit Union Fresh Start Checking
Wisconsin Brewery Credit Union Fresh Start Checking Crossbridge Community Bank Fresh Start Checking WESTconsin Credit Union Foundations Checking
Wyoming WyHy Federal Credit Union Second Chance Checking Wyo Central Federal Credit Union 2nd Chance Checking Valley Credit Union Opportunity Checking

How to Use Second-Chance Credit Unions

You'll want to understand the limited features that come with most second-chance bank accounts when you're trying to open one. As we said before, most credit unions will happily work to build your credit reputation with you over the course of time.

The goal is to help you graduate to a checking and saving account with full privileges and features. That will also help you to qualify for a credit card and improve your credit score.

Opening Second Chance Bank Account

Second chance checking account features include:

Your second chance account "dream list" come with the following:

Low or no monthly fees. No minimum balance requirements. Free services like: Debit card access, Online bill payments, Unlimited check-writing privileges.

You'll find that some second chance credit unions don't have some of these services or benefits, so you may have to shop around to find a credit union that fits your needs.

Do Second Chance Credit Unions Really Help Rebuild Your Credit?

The good news is that, yes, they do.

Rebuilding Bad Credit

The N.E.W. Credit Union tracks stories of their clients who have been helped by working with them:

"I came down with COVID-19 after starting a new job. I was sick for three weeks and had no health insurance, and also developed another medical issue that I am still battling one year later. During this time, we emptied our savings accounts and got behind on our loans. We didn't know where to turn, but the V.P. of Lending at N.E.W. Credit Union reached out and offered help. We were about to lose our vehicles when she helped us put a claim in for debt protection which brought the loans current. She went above and beyond making the calls for us, which made it possible for me to focus on getting well again. They have given us hope that we can rebuild everything with N.E.W. Credit Union in our corner!"

Second-chance checking accounts really do offer you a fresh start. It takes up to five years for negative remarks to fall off your report but don't worry about that.

Once you have a second chance bank account, you have a clean slate to start building a positive history with ChexSystem. And that will open doors of opportunity for you and your family to create a bright future.

Are there such things as "guaranteed approval" credit cards for people with bad credit? Doesn't it sound a little like a pink unicorn?

Solution iconWell, believe it or not, guaranteed approval credit cards not only exist, but they're designed for people with bad credit!

But before you think you've found the answer to all your credit dilemmas, you should know that even a guaranteed approval credit card has a few qualification requirements. They may be minimal, but they're still there.

There are two basic requirements issuers want to see even for a guaranteed approval credit card:

And while these types of cards are intended to help people with bad credit, just how bad can someone's credit be before they don't qualify for one of these cards? FICO considers a score between 300 and 600 as a bad credit score, while VantageScore uses the language of "poor" to indicate a bad credit score. Any number between 500 and 600 is considered a poor credit score, and a number between 300 and 499 is considered "very poor."

Knowing which companies will help "subprime borrowers" is extremely important, as applying for a credit card and getting rejected causes your credit score to drop again.

Your Credit Report and Credit Score

Along with knowing which companies can provide you with a credit card, even if you have "bad" credit, you need to know your credit score. Now is not the time to stick your head in the sand and hope for the best.

Through 2023, you can request a free copy of your credit report at www.annualcreditreport.com. It takes three easy steps to request credit reports from Equifax, Experian or TransUnion (or all three simultaneously).

You'll be asked a few questions to which only you should know the answer. They're meant to be challenging to help protect you from identity theft. Once you answer the questions, you can download and print your credit report.

On Annual Credit Report's site, they disclaimed,

"Your free annual credit report does not include credit scores."

The primary reason it's important to check your credit report is to make sure all the information on the report that determines your score is accurate.

That's on you. No one will check your report to verify that your identifying information is correct and up-to-date or if a company inputs the wrong information or claims that you owe them money when you really don't.

Person Checking Credit Report

You can use dispute processes to correct any errors and should do so as soon as you are aware of the mistakes:

It's normal for the two credit scoring models to produce different numbers. Lenders understand this and look beyond the number to what it represents — good, bad, fair, excellent.

Secured Versus Unsecured Credit Cards

There's a major difference between secured and unsecured credit cards.

Investopedia defines a secured credit card as a "type of credit card that is backed by a cash deposit from the cardholder." With a secured credit card, you pay a cash deposit upfront to guarantee your credit line if you default on any payments.

An unsecured credit card doesn't require collateral as a security deposit to secure it. They're a common type of credit card, but not one that someone with poor credit will likely qualify for.

Once the deposit is in place, a secured credit card acts like any other credit card, although they usually have lower credit limits and more fees than unsecured credit cards do.

Secured Versus Unsecured Credit Card

In a sense, secured credit cards act like debit or ATM cards, so why are they better than using a debit card or getting cash from an ATM? Technically speaking, a secured credit card still uses credit from the issuer — they just have access to a cash reserve if the user doesn't pay their credit card bill.

A secured card is worth getting because it is a way to build your credit score, whether you have bad credit or no credit due to your age or life circumstances. As long as you continue to pay at least the minimum owing on your card, you'll improve your credit score and may look forward to qualifying for an unsecured credit card without needing to tie up collateral or a cash deposit.

"Guaranteed Approved" Credit Cards

While nothing is truly guaranteed, these are the easiest credit cards to get approved for. Bad credit or no credit is not, on its own, a barrier to getting one of these 12 credit cards.

1. OpenSky Secured Visa Credit Card

OpenSky Secured Credit Card

Secured rating: 4.5
Average approval rate: 85% for the past five years
Credit needed: Poor
Requires: U.S. mailing address, proof of identity, some income
Doesn't require: Credit history, credit check
Annual fee: $35
Regular APR: 20.39% variable

2. Surge Secured Mastercard

Surge Secured Mastercard

Secured rating: 4.6
Average approval rate: N/A
Credit needed: All scores welcome to apply
Requires: $300 initial refundable deposit (sets your credit limit)
Annual fee: $69
Regular APR: 19.99% variable

3. Capital One Platinum Secured Credit Card

Capital One Platinum Secured Card

Secured rating: 4.7
Average approval rate: N/A
Credit needed: Limited or bad
Requires: A deposit amount that's less than the credit limit you'll be given, credit check with all three credit bureaus
Doesn't require: Credit score
Annual fee: None
Regular APR: 28.49% variable

4. Capital One Quicksilver Secured Cash Rewards Credit Card

Capital One Quicksilver Secured Card

Secured rating: 4.8
Credit needed: Limited, bad
Requires: U.S. mailing address, have a valid SSN, disclosure of total annual income, access to authorized bank account, refundable $200 security deposit to get a $200 initial credit line
Annual fee: None
Regular APR: 28.49% variable

5. Discover it Secured Credit Card

Discover It Secured Card

Secured rating: 4.7
Average approval rate: N/A
Credit needed: New or rebuilding
Requires: 10.99% intro APR for six months, minimum refundable $200 security deposit to get a $200 initial credit line
Doesn't require: Credit score
Annual fee: None
Regular APR: 25.99% variable

6. Bank of America Customized Cash Rewards Secured Credit Card

Bank of America Secured Credit Card

Secured rating: 4.6
Average approval rate: N/A
Credit needed: Bad or limited
Requires: A minimum refundable security deposit of $200 (maximum of $5,000)
Doesn't require: Credit check
Annual fee: None
Regular APR: 25.49% variable

7. Citi Secured Credit Card

Citi Secured Credit Card

Secured rating: 4.5
Average approval rate: N/A
Credit needed: Limited history, no credit, new to credit
Requires: Minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 25.49%

8. Savings Secured Platinum Rewards Credit Card

Savings Secured Platinum Rewards Card

Secured rating: 4.5
Average approval rate: N/A
Credit needed: N/A
Requires: Minimum refundable $250 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 14.99%

9. nRewards Secured Credit Card

nRewards Secured Credit Card

Secured rating: 4.5
Average approval rate: None, poor
Credit needed: N/A
Requires: Must be a member of Navy Federal Credit Union, minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 18%

10. PREMIER Bankcard Secured Credit Card

PREMIER Bankcard Secured Card

Secured rating: 4.5
Average approval rate: N/A
Credit needed: Bad, limited, no credit
Requires: Minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 18%

11. Indigo Unsecured Mastercard

Indigo Unsecured Mastercard

Bad credit rating: 4.3
Average approval rate: N/A
Credit needed: Fair, good or previous bankruptcy
Requires: Minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: $0 - $99
Regular APR: 24.9%

12. Reflex Mastercard

Reflex Mastercard

Bad credit rating: 4.4
Average approval rate: N/A
Credit needed: Bad, fair, or no credit
Requires: See terms
Doesn't require: Credit check
Annual fee: See terms
Regular APR: 24.99 - 29.99% variable

13. FIT Mastercard

Fit Mastercard

Bad credit rating: 4.3
Average approval rate: N/A
Credit needed: Bad, poor, fair
Requires: See terms
Doesn't require: Credit check
Annual fee: See terms
Regular APR: 29.99%

What's Better — Bad Credit or No Credit?

In general, no credit is better than having bad credit. But when it comes to qualifying for loans or a credit card, these issues put you in a difficult position. If you find a loan or credit card company that will lend you money, you'll likely have a higher interest rate with less attractive borrowing terms.

Even with these similarities, bad credit and no credit are two different problems, requiring different strategies to overcome them.

Bad credit is usually defined by one or more of these behaviors: late payments, collection accounts, bankruptcies, charge-offs, or other damaging items. Bad credit behavior is reflected in bad credit scores of less than 600 for FICO and VantageScore.

Solution iconAccording to FICO Score, the average credit score is currently 716, and 15.5% of Americans have a score below 600.

Woman Paying Off Credit Card

No credit is when someone has never applied for a loan, credit card, or financing before and has zero credit history. It's hard to develop a credit score when one is "credit invisible" and doesn't meet the minimum requirements for a FICO or VantageScore credit score.

In the eyes of lenders, bad credit is seen as worse than no credit. No credit means you're an unknown quantity, while bad credit means you're a known quantity with a history of credit management mistakes.

Ways to Fix Bad Credit

We've alluded to some ways to fix bad credit above, but let's be clear about four ways you can fix bad credit and turn a low credit score into a higher one that will give you more opportunity to borrow money with fewer penalties.

Ways to Fix Bad Credit

Here are the four ways you can fix bad credit:

  1. Review your three credit reports. One way to check your credit score for free is to sign up for an introductory scoring service. You can sign up for a limited time (usually one week) and check your score for free. Just remember to make a note in your calendar to cancel your subscription before the trial period ends. If you don't, the service will start billing your credit card.
  2. Check your reports for any errors. The Federal Trade Commission released a report stating that 25% of all consumers found mistakes on their credit reports. Don't assume that credit bureaus will provide you with an error-free report. Be diligent in checking your reports and follow up with the credit bureaus to get them removed.
  3. Build new credit. Along with using secured and unsecured credit cards, become an authorized user, acquire a credit builder loan, get a student loan (if you actually need one), and use Experian's credit boost. If you can show that you've paid bills like your cell phone, utilities, or streaming services consistently and on time, Experian can "pull data" from your bank account and use the information to help create a credit history. This only works with Experian, but it's a way to start.
  4. Develop good credit habits. It's never too early or late to develop good credit habits. Pay your bills on time and consistently. Don't spend money you don't have.

So, while you can get a credit card even with bad credit, we'll keep encouraging you to move forward by repeating the last bit of advice: develop good credit habits. Do the work to pay your bills on time, every time.

Solution iconYou'll not only improve your credit score, but you'll also sleep better. And the world will offer you more opportunities to expand your horizons.

Do you have any questions about any of these listed credit cards or anything else credit-related? If so, be sure to drop us a comment down below, and we'll get to answering any of your potential questions as soon as possible!

It's easy enough to make a payment late during the best of times, but with the effects of COVID-19 still lingering, many people still struggle to pay all their bills on time.

The recent shock to the world economy disrupted supply chains which caused major delays in shipping. Labor shortages and rising demand only made things worse for many Americans, and inflation remained near a 40-year-high as of last month.

Two-and-a-half years into the pandemic, 75% of Americans have non-mortgage debt, and many of them report that they are struggling hard to pay them down. Last year Americans thought they would be able to pay their COVID-related debt off within a year, but now only 22% do.

"Seventy percent of Americans have lived paycheck to paycheck at some point during the pandemic, and nearly half (48%) are living paycheck to paycheck right now."

Forbes posted an article reporting that:

"75% of Americans have missed credit card payments due to COVID-19."

Obviously, some of these missed payments could be due to forgetfulness, but a "whopping 43% of respondents missed or paid late due to needing that money for essentials, while another 27% couldn't pay due to unexpected expenses."

Households who qualified as middle-income put their expenses on their credit cards, hoping to pay the debt off in the future. They also used bank loans and lines of credit and, in some cases, took on payday loans.

Experian reports,

"There's a good chance your lenders are prepared to work with you to provide payment relief without causing late payments to appear on your credit reports."

With the best will in the world, it hasn't been possible for everyone to pay bills on time and avoid late payment fees. We've researched ways for you to deal with and remove the late payments you may have incurred since 2020.

Solution iconThankfully, if you have late payments that resulted during COVID-19, there are ways to remove them from your credit report.

The CARES Act

The CARES Act is the Coronavirus Aid, Relief, and Economic Security Act that came into effect on March 27, 2020, and was created to help Americans impacted by COVID-19.

Solution iconOne of the biggest ways this act protects you is that creditors must make accommodations for people who are having trouble making their payments on time. You'll still have to make your payments, but if you contact your creditor or lender, they must offer you an alternative payment arrangement.

The CARES Act

There are four main types of agreements creditors and lenders are currently making:

  1. Forbearance
  2. Deferment
  3. Loan modifications
  4. Partial or flexible payments

Once you have contacted your creditor and made arrangements with them, they cannot report your payments as "past due" as long as your account was in good standing prior to the pandemic.

The timeline applies to agreements that were made between January 31, 2020, and 120 days after the COVID-19 national emergency ends.

How to Remove a 30-Day Late Payment Incurred During COVID-19

Before you start negotiating with your creditor in order to get a late payment removed, you'll want to understand why you were reported late and identify the circumstances that caused the late payment.

Check if the payment was missed or if it bounced. A payment may be marked late because you didn't make a big enough payment to cover the minimum amount due.

It's always worth checking to see if the creditor made a mistake, not you.

Note iconIf you do find they made a mistake, call them as soon as possible.

Ten of these common mistakes were listed by Ali Zane on his iMax Credit site, and we've included them as he listed them:

  1. The creditor applied an annual/monthly fee to your account, which led to the late payment.
  2. You were locked out of online access to the account, or the creditor's system was down.
  3. The creditor had the wrong spelling of your address or a missing apartment number.
  4. The creditor failed to update their system to your new mailing address or email address that you had provided before.
  5. When processing your payment, the creditor's phone representative took down your wrong bank account info.
  6. The auto payment you had set up was canceled without you knowing.
  7. There was an interest charge incurred after you thought you had paid off the account in full.
  8. Charges were made to your card that was not authorized or were of a fraudulent nature.
  9. You had set up a prior deferment with the creditor due to COVID-19, and the creditor still marked you late.
  10. You made a payment on time, but the creditor failed to post it to your account.

If you find your late payment is due to one of these reasons, he recommends you ask the creditors to remove the "late payment" designation as a courtesy. It's also wise to ask them for a letter stating their willingness to remove the "incorrect late payment from the credit report."

Reviewing Credit Report

Some banks and credit card companies may positively respond to requests made by phone, while others would need a lot of convincing, and some would take hard work to get them to change their position.

Some extenuating circumstances may work in your favor if they apply to your situation. We haven't found a better list of these types of circumstances than those listed by Ali Zane in the same article, so we'll give them to you in their entirety:

  1. You traveled while statements were being sent to your home.
  2. You were hospitalized or suffering from emotional trauma.
  3. There was a death or emergency in the family.
  4. Your bookkeeper or accountant forgot to render payment.
  5. You had set up automatic payments through your bank, which encountered an error.
  6. Your email was hacked where you get e-statements, or the creditor's emails ended up in spam.
  7. Your paper statements and mail was being stolen.
  8. You had submitted a double payment the month prior, mistakenly thinking it would cover the next month.
  9. Your town was subjected to a natural disaster.

You won't be able to communicate these extenuating circumstances via a phone call. You'll need to fax the information to the appropriate credit bureau and ask them to review it, which usually happens within two to four weeks.

If you can now make your payments, were able to pay your bills on time, and only fell behind when the pandemic started, there are ways to remove the late payments from your account.

1. Ask

Many creditors can understand and sympathize with people struggling to keep up with paying their bills during this time. Calling your lender directly may give you a more human experience than you anticipated.

First, let them know that you have made or are making the past due payment immediately. They'll want to know your circumstances since the pandemic began so they can fully understand your situation. They might also ask you to scan and email them (or fax) supporting documents that show you lost your job or were ill due to COVID-19.

Calling a Creditor

You can request three things while on the phone with the representative:

  1. A late payment removal
  2. A reversal of any late payment fees
  3. A deferred payment for next month

2. Step It Up

Most creditors have higher-level customer resolution departments. If your initial phone call doesn't get you the results you need, ask to speak to a manager or someone in a more senior position.

Alternatively, you can Google the company's website to find their phone number, address, or department's email address. Send a letter to the CEO and include all your contact information so they can reply to your request.

Sending an Email

Make sure to include as much information as possible as to the circumstances that caused your payments to be late, and include any documents that will support your claim. A respectful and honest letter can go a long way to getting your late payments removed.

3. Get Help

If you do any amount of research or try to accomplish this on your own, you'll see that it's a lot of work. That's why it's sometimes best to hire a credit repair company to help you.

Getting Financial Help

Don't assume all credit repair companies are created equal. Make sure to check reviews to see what other people have to say about their experience with the company. Check to see if it complies with your state's licensing and registration requirements.

Finally, read the fine print about when they will charge you for their services. You don't want to pay them anything until they successfully repair your credit. Nor do you want to pay them a monthly fee or any extra hidden fees.

4. Forbearance

Although the circumstances of COVID-19 don't meet the criteria of "ordinary" circumstances that will qualify you for forbearance, many lenders are approving forbearance for those who are financially struggling due to the pandemic.

Qualifying for Forbearance

According to Experian:

"…any of your accounts placed in forbearance under the CARES Act will be "paused" in the payment status they are at when forbearance begins. If the account is current and in good standing, it will stay that way even if payments are reduced or suspended during forbearance. If an account is, say, 30 days past due when forbearance starts, it will remain at that status (and not rack up further delinquency) during the forbearance period."

They've also compiled an exhaustive list of financial and non-financial institutions' websites to help you find more relief measures.

5. Government Help with Bills

The U.S. is also invested in helping you get through this season and back on track financially. They've instituted a wide range of government programs to help with everything from phone bills to medical bills to prescription drug costs.

Low Income Home Energy Assistance Program

These programs include:

SNAP — also known as food stamps — just got a boost to $36 a month for the average recipient. Check their eligibility requirements to determine whether you or someone you know who's in need qualifies.

The Benefits of Paying Bills on Time

Once the pandemic is behind us and we've had a chance to catch up, we'll all be in a better position to take charge of our financial life again.

The most important reason to prioritize making payments on time is that this alone is the best thing you can do to improve your credit score. Your payment history makes up 35% of your score. Pay on time, every time, and you'll be on your way to a great credit score.

Paying Bills on Time

Paying your bills on time will also save you money as you won't be charged late fees. Some companies set your "payment due" on a timer and will start to charge late fees the second the clock ticks over.

You'll benefit from lower interest rates as well as getting access to better products. Landlords consider your credit score as part of your application, and a higher credit score can give you the edge over other applicants.

One last shout-out to iMax Credit. Their team of expert credit repair specialists can help you with every credit situation you may face. The last list we'll share with you from them rates an extensive list of creditors based on how easy or difficult it is to get them to remove late payments:

Creditors That Are Easy to Work With:

The creditors we consider to be easy to work with include:

Creditors That Take Effort to Work With:

The creditors that may take a little more effort to work with include:

Creditors That Are Difficult to Work With:

The creditors that are considered difficult to work with include:

Some good news is that the Federal Reserve Bank (and many experts) don't think this inflation is long-term. They believe that once the supply chain issues are worked out, "in a lot of cases…prices will actually drop."

We can only hope they're right. In the meantime, if you're looking for ways to improve your credit scores as fast as possible, I'm here to help!

There are a ton of different ways to build and repair your credit. Some of them take years of hard work. Some of them require legal proceedings. Some of them benefit from charisma and a humble outlook. Most of them require sound financial habits.

A few, though, are automated or, at the very least, streamlined to make the credit repair processes they use easier. These are the credit repair software/apps/programs, and they're accessible to pretty much anyone.

The question is, which credit repair program should you use? Well, first, you need to know:

What is Credit Repair Software and How Does it Work?

Note iconCredit repair software is, broadly speaking, a computer program that helps you take the actions necessary to improve your FICO credit score.

No computer program can do anything truly unique. That is, there's no hidden secret that you need a program to do. Rather, they help you in a variety of ways, such as:

These are all things you can do on your own, of course, but trying to tackle your credit report when you're already in dire financial straits, especially if you don't really know what you're doing, can be a huge source of stress and anxiety. Not to mention that if you do it wrong, you can end up worse than where you started.

Using Credit Repair Program

Of course, there are also credit repair companies out there who will do all of this for you, full service. We've created a full rundown of the pros and cons of that over in this post, but the main drawback is simply the cost. If you're already struggling to maintain your financial status and your credit is poor, paying someone for an expensive credit repair service may not be the most comfortable thing to afford right now.

Credit repair software is basically a framework and a semi-automated way of handling the tasks necessary to improve your credit. They give you a step-by-step guide to follow, can handle some of the processes automatically and are a cheaper way of doing it than hiring a credit repair agent.

Convinced? If so, here are the ten best credit repair software programs you can try out.

1: DisputeBee

Solution iconPricing: $39/month and $99/mo plans

DisputeBee is one of the more fully automated credit repair programs. To use it, you pull your credit report from one of the three bureaus and then import it into their program. They walk you through how to do that if you haven't done it before, too.

Once your report has been imported, they scan through it and look for items that might be viable to dispute. They will then automatically generate a dispute letter to send to the bureau and all the information you need to print and mail it; you just need to supply the stamp.

DisputeBee Credit Repair

As you receive replies from the bureaus, you upload them to the system, and it will track your progress. Depending on the responses, they may generate further letters for you to send, or they may mark a line item as verified and indisputable.

This piece of software will cost you $39 per month. I like that it's one of the low cost DIY credit repair options on this list as some of these programs are hundreds of dollars.

2: Credit Versio

Solution iconPricing: $19.95/month, $24.95/mo, and $29.99/mo plans

Credit Versio links to all three of your credit reports from the three bureaus and prepares what they describe as "an aggressive dispute strategy" to help dispute and remove items from your credit report. Since they pull your credit reports on your behalf (rather than as a third party), it also doesn't count as a hard inquiry, as some other options might.

Credit Versio

Their library of dispute templates will handle pretty much any kind of blemish on your credit and will dispute late payments in the most effective ways for each. If you don't want to just blindly follow its recommendations, they also offer a library of coaching information and courses you can take to improve your understanding and financial literacy.

They also offer three different plans, for $20, $25, and $30 per month, respectively. They essentially vary only in the number of updates to your credit report they pull and the amount of identity theft insurance they offer.

3: Credit Repair Magic

Solution iconPricing: $97 one-time payment to download

This is one of the oldest credit repair programs available, and it's still around because it's at least reasonably effective. Don't worry about how dated the website looks; it tells you everything you need to know.

Credit Repair Magic

It functions in basically the same way as the others, by identifying items on your credit report and giving you dispute letters to send to the bureaus to fight them. However, unlike other options on this list, it's not a monthly fee for a program; it's a one-time purchase that costs you $97. It's also not limited in the number of users you can run through it, so if you want to help a partner or family member with your copy of the software, you can do so.

4: Personal Credit Software

Solution iconPricing: $199.95 one-time payment to download

Despite the generic name, this program is another long-running instance of credit repair software. They import your credit report, you clarify data as necessary, and they generate a guide for you to follow to repair your credit. They also offer tutorials and courses to help you build your credit in other ways.

Personal Credit Software

For the most part, this program is the same as the others in function. They have a dispute tracker and a template library for letters to send, as well as recommendations of who to send them to and what to send. They also have a calendar to manage it all.

This program has a "regular price" of $400 but is usually on sale for $200. It's also not a monthly fee but rather a one-time purchase, like Credit Repair Magic before it.

5: Credit Detailer

Solution iconPricing: $399 one-time payment to download

Credit Detailer Platform

This is another of the older credit repair platforms, having been in operation for at least the last 16 years. They do the same thing as the rest, but they have a couple of benefits. For one thing, their platform is fully bilingual with English and Spanish coverage. For another, their license is a lifetime purchase. While it's expensive – it will cost you $400 when it's on sale – you can access and use it any time for as long as the program exists and can function on modern computers. They also offer the ability to use their platform in service to others if you want to create your own credit repair business once you're done repairing your own credit.

6: Dovly

Solution iconPricing: Free plan, $16.70/mo Ultimate plan, and $39.99/mo Premium plan.

One of the more modern applications on this list, Dovly bills itself as a fully automated credit repair program. They do a soft pull of your credit report (rather than a hard pull that can hurt your score), and then you go through and select the items that you want to dispute. This way, they don't accidentally dispute something good or waste time disputing something that has already been verified. Then, you sit back and watch it work. They handle all of the dispute letters and filing and monitor your score to report back how well it's working.

Dovly Credit Repair

Dovly has three plans. The free plan is just that – free – and offers one dispute, per month, with TransUnion. It's not much, but it's better than nothing. The Premium plan is $40 per month and allows you up to three disputes per month with all three bureaus (Equifax, Experian, and TransUnion). They also offer identity theft insurance and a few other perks. They also have an "ultimate" plan that only costs $9 per month but requires a full-year purchase. As an added bonus, if they can't raise your score within 90 days, you can get your money back.

Unfortunately, this is about it for credit repair programs. There are a few others out there, but they're aimed at people looking to create a credit repair business, or they've been retired and are no longer available. As such, the rest of this list is filled with ways to help you out but aren't strictly credit builder programs.

7: Credit Karma Money

Solution iconPricing: Free

Credit Karma is one of the better-known score tracking platforms, and Money is a program they offer in partnership with SeedFi. Essentially, they create credit builder loans through SeedFi. When the loan is paid off after enough monthly payments, the money is deposited into a spending account with Credit Karma directly, which you can then use as normal money.

Credit Karma Money

Since the credit builder loan is paid up front and managed behind the scenes, and since it's usually for small values, it's easy to handle and easy to keep rolling. Plus, you can monitor your score through Credit Karma quite easily. It's quite cheap and easy to build your credit this way, though it doesn't do anything to fix your bad credit or dispute previous blemishes. You'll have to use one of the other platforms on this list or simply do it yourself.

8: You Need A Budget

Solution iconPricing: $14.99 per month

No matter how much you work to build your credit, if you don't have sound financial habits, you're going to fall back into poor credit sooner or later. That's why one of the best things you can do is build strong financial spending discipline, and the best way to do that is with a budget you can manage and stick to.

You Need a Budget

You Need A Budget (or YNAB) is a cloud-based budget program you can access from your phone. It links to your bank account and can pull data to track your expenses, both regular and irregular. It helps you save money, which you can use to manage your debts and pay off outstanding loans, and then put towards investments and other planning. It also helps you gain a better picture of your current spending, so you know where all that money is going.

9: Experian Boost

Solution iconPricing: Free

Experian Boost is unique in that it is offered directly by one of the three credit bureaus. It's also not as much a credit repair program as a credit builder program. It works by enrolling your various bills into credit reporting. You'll earn credit for paying bills like Netflix and your ISP or Phone bills on time, which normally would only happen if you used a credit card to pay them.

Experian Boost Program

There are a few downsides to this. First of all, it only reports to Experian, so it won't necessarily affect your score with the other agencies. It's also a minor boost – only around 1-15 points on average. On top of that, it doesn't do anything to dispute or remove possible errors on your credit report. All it does is report some extra bills to show that even if you've had some financial trouble in the past, you're still capable of paying at least some things.

10: TurnScor

Note iconOct 7, 2022 Update: The TurnScor.com website is no longer loading. We checked their social media pages to see if there is any indication that they went out of business, but we could not find anything. For now, we've removed the link to their website. We'll post an update as soon as we hear more.

TurnScor is a somewhat older player on the credit repair stage, though that doesn't mean they're out of date. They're essentially an interactive guide on a web application that helps you pull your credit report and file dispute letters. They don't actually do anything automatically, though; they're more like an interactive training program.

TurnScor Credit Repair

One possible downside to TurnScor is that they recommend using Flash, which has been deprecated and no longer functions. It's unclear whether or not they've updated their program to function without it or if one of their methods for training videos simply no longer works.

Honorable Mentions

These credit repair programs are popular choices but didn't quite make this list because they are primarily intended for credit repair businesses that manage many clients. Still, they may be helpful to some of you, and we wanted to give them a chance to shine:

Who knows; perhaps after you've improved your credit, this will inspire you to start a credit repair business and help others!

Should You Use a Credit Building Program?

The question you may have after reading all of this is whether or not these programs are really worth it. The truth is, it depends on you. Some people simply rebel against the idea of working with credit bureaus, and if they can click a button to have some letters ready to print and mail, then it's way easier than trying to do it all on your own.

Good Credit Score

On the other hand, none of these programs do anything you can't do yourself. There are plenty of dispute letter templates available for free online, it's easy to pull your credit report and identify issues, and the addresses you need to send documents to are public knowledge. It just takes a little more legwork. Is it worth it to spend a few bucks and do it faster? That's up to you.

If your credit is low, your finances are a mess, and it feels like you're struggling to tread water at the bottom of a well, it can feel hopeless every time a new bill comes in. It's expensive to be poor, penalties layer on top of penalties, and the problem seems insurmountable.

Note iconWhat if you could call up someone and have them come in to fix your credit? What if, by hiring a third-party service, you could improve your credit score, get your debts under control, and simplify everything to make it infinitely easier to manage?

That's the idea behind a credit repair agency. The question is, does it really work? Let's dig in.

What Does a Credit Repair Agency Do?

A credit repair agency is, generally, a for-profit company that works to help you fix your credit with a few specific kinds of actions they take.

What they claim they can do is nearly unlimited. They will claim they can handle and remove things like:

Where "remove" means "get them removed from your credit report."

Since having negative marks on your credit report brings down your score, having them removed can bring your score back up.

Solution iconCan a credit repair agency actually do this? Well, it's questionable.

If there's incorrect information on your credit report, such as information that doesn't apply to you, or that was caused by identity theft, or is otherwise false, it can be disputed and removed. On the other hand, if the negative marks on your credit report are legitimate, they shouldn't be able to be removed. Something like a Goodwill Letter may be able to help remove a blemish from an otherwise good credit report, but it won't help if you have a history of late or missed payments.

A credit repair agency isn't doing anything special. Every step they take is something you can do yourself; you just need to know how to do it. Usually, it just means pulling your credit report (which is free once a year from Annual Credit Report), reviewing it for anything that is incorrect, and sending dispute letters to the credit bureaus to fix or remove the incorrect information.

Credit Repair Agency Reviewing Report

Of course, if seeing your credit report is overwhelming, your bills are piling up, and you have no time between work and childcare to even consider spending the time on it, maybe paying someone else to do it for you could be worthwhile.

Therein lies the rub; you still have to pay a credit repair agency to handle the work for you. If you're already in a tough financial situation, adding another expense with no guarantee of it helping your overall finances isn't a great idea.

It's also worth mentioning that some promises a credit repair agency makes might not be accurate.

Credit repair sounds like an enticing service, and it's not entirely without merit.

Solution iconIn short, a credit repair agency will generally send out letters to request verification of debts owed (which is part of the debt dispute process and can legitimately have some debts wiped due to incomplete records). They will also get incorrect information removed or corrected.

However, they may also simply send these letters for every debt and every derogatory mark on your credit report, which not only makes the individuals who have to work with your credit report irritated, it isn't likely to be very effective. Moreover, it can eliminate any good will you would be able to utilize with a goodwill letter at another time.

Is Credit Repair Legal?

In 1996, the federal government passed the Credit Repair Organizations Act, or CROA, which sets forth guidelines for what a credit repair agency can and cannot do. Credit repair agencies must comply with this law; otherwise, they are in violation of federal law. Of course, that doesn't stop scammers, but it offers you some recourse to at least verify that a credit repair agency is legitimate.

Is Credit Repair Legal

According to the law, an agency must:

So, credit repair agencies can be legitimate, as long as they comply with federal law. Additionally, Georgia has state laws that apply further penalties and make operating a violating credit repair agency a misdemeanor. You can read more about that here.

The Pros of Hiring a Credit Repair Agency

As long as you hire a good, compliant, and effective credit repair agency, you can see several tangible benefits.

Pros of Hiring Credit Repair Agency

1. An expert handles your disputes for you.

First and foremost, the people working for a credit repair agency are experienced, whereas you aren't. They know what they're looking for when they pull your credit report. They have templates and letters ready to go; all they need to do is fill them out with the appropriate information and send them to the right agencies.

A trained credit expert can identify which items on your credit report are legitimate, which are potentially open to removal, and which are likely to be incorrect and thus disputable. They handle the disputes, they know what evidence to present, and they know how to do it all while complying with legal requirements for credit interactions.

2. The agency may have better access, resources, or connections than you do.

A credit repair agency likely already has dedicated connections to people within the credit agencies and the major financial institutions. If you have debts with small credit unions, they might not have established relationships, but they probably work with the big banks, credit bureaus, and even major debt collectors on a regular basis. These connections can be leveraged in your favor.

3. They may have further advice to continue to repair your credit.

Once the repair agency has done what they can for you, they may be able to offer you advice on how to further build and repair your credit. Of course, you don't necessarily need an agency to do that. After all, you're reading this on a site called Credit Building Tips, and you didn't pay to access it; I also have plenty of other guides on how you can build your credit in a variety of different ways. Plus, I'm always available if you want to ask a question. Just drop me a line or leave a comment!

The Cons of Hiring a Credit Repair Agency

While credit repair agencies can benefit your credit in some situations, there's only so much they can do for you, and there are a few major drawbacks to using such a service.

Cons of Hiring Credit Repair Agency

1. They cost money.

The biggest issue with a credit repair agency is the fees they charge. Depending on your financial situation and the amount of work they need to do, these can get pretty expensive. I've seen companies charge a fee of anywhere between $30 and $500 per line item they get removed from your report. They may also charge a retainer per-month to keep their services going. It can get very expensive, very quickly. Not only does this put further financial strain on your current situation, but it can also make it even harder to keep paying your existing debts.

Since a verification or dispute letter has a minimum of the legally-mandated 30 days (plus transit time for mail) to process, you're looking at a minimum of 1-2 months (and often much more) for these services, plus fees for every line item on your credit report. It can add up very quickly.

2. They can't do anything you couldn't do on your own.

Everything that a credit repair agency can do is something you can do on your own. You can send dispute letters, you can pull your credit report and analyze it, you can consolidate debts, you can send debt verification letters to collection agencies; it's all available to you, by law, for free. A credit repair agency smooths out the process by having templates ready to go, but they aren't doing anything unique or exclusive to their service.

3. They can only remove certain kinds of derogatory marks.

Credit repair agencies have to operate within the bounds of the law. That means there's only so much they can do. If you've been the victim of identity theft and have a bunch of incorrect information on your report, they can dispute and remove it. If a legitimate error has led to reports of late payments or delinquent accounts that don't actually exist, they can get them removed. If a debt was incorrectly sold to a collector and can't be verified, it can be removed.

But, any legitimate negative marks on your credit report, like real late or missed payments or debt sent to collections, can't generally be removed. And, once it is verified, it closes further doors that could potentially be used to remove it down the line.

4. The industry is fraught with scams.

Perhaps the worst part of credit repair as an industry is that, despite the federal laws regulating it, there are still many companies offering illegal services. These can range from "jamming" to identity theft on your behalf to simply charging you for nothing or even generating fake reports to show improvement that doesn't actually exist.

Solution iconWhat is jamming? Jamming is when an agency sends repeated requests to verify debts, over and over, even if it has been verified before. If a lender or bureau fails to verify within 30 days as specified by the Fair Credit Reporting Act, the debt or demerit can be removed from your report, even if it's legitimate. By essentially spamming these agencies, they "keep trying" until they get the result they want, hoping that bureaucracy or delays in paperwork run out the 30-day window.

It can be very difficult to spot scams ahead of time, as well, so you need to remain vigilant and be familiar with the laws governing credit repair agencies if you intend to hire one.

Is There a Good Alternative to Credit Repair?

You have two main options if you don't want to go with a credit repair agency.

Meeting With Credit Counselor

The first is to do the legwork yourself. It's tedious, it's time-consuming, and it's stressful, but it's free and can repair your credit if you do it right. Of course, that's why I've started this blog; to compile as much information as I can to help everyone reading this build and repair their credit score.

The second is to use a Credit Counseling Organization instead. A credit counselor is generally a non-profit organization that can analyze your full financial situation and:

Repairing your credit can be tricky, especially if you have no idea where to begin. That's why I've been building this blog and why I'm always available to offer advice. If you have questions, want to know about a particular strategy, or just need general credit repairing or building help, feel free to leave a comment or drop me a line. I'd be more than happy to assist you on your credit building journey however I possibly can!

The single most significant factor in calculating your credit score is your payment history. Making up 35% of your FICO score, payment history is a value assigned to how well you've been able to repay your debts. Do you make your payments on time? Have you made them on time for months, years, or decades?

An isolated incident can still be devastating. According to FICO's credit damage data:

"…one recent late payment can cause as much as a 180-point drop on a FICO score, depending on your credit history and the severity of the late payment."

Considering that the FICO score goes from 300 to 850 – a 550-point range – a drop of nearly 200 points is enormous. Now, sure, that's the worst-case scenario. A person with a perfect credit score who suddenly drops a payment and misses it for 90+ days will see a huge hit. People with lower starting credit and only a couple of late payments won't see as significant an impact. Even still, though, it has the potential to be very damaging.

No wonder people will take any opportunity to try to alleviate that drop. That's where a goodwill letter comes into play.

What Is a Goodwill Letter?

What is a goodwill letter? It's a letter that you write to your creditor asking them if they can waive reporting a late payment to the credit bureaus.

Example Goodwill Letter

If the creditor accepts, they don't inform the credit bureau of the late payment, and your credit score doesn't take a hit.

Solution iconThe idea of a goodwill letter is to appeal to the empathy of the decision-makers who work for your creditor. You appeal to them based on your past payment history, a demonstration of temporary hardship, and a genuine plea to have the mark removed from your credit report. It is, in essence, an apology and a promise not to let it happen again.

A goodwill letter works on several levels.

Goodwill letters don't always work. However, negative marks stay on your credit report for up to seven years, so it's always worth a shot sending the letter and ask if they can remove it. You don't lose anything for trying, after all.

Do You Even Need a Goodwill Letter?

A goodwill letter is helpful in certain circumstances, but it's not always necessary.

First of all, if there's a negative mark on your credit report, your first step is to verify that it's legitimate. Sometimes, messages get mixed up, payments get lost or misattributed, or computer systems mishandle your information. If an issue is reported on your credit report but not a real one, a goodwill letter isn't the correct response. Instead, you should dispute the information with the credit bureaus. You challenge the validity of the issue, and upon investigation, it will be removed if it's inaccurate.

Do You Need a Goodwill Letter

So, for example, in a case of a genuine mistake or identity theft, you can get damage to your credit reversed. However, for legitimate late payments disputing the validity of the issue isn't going to help.

A goodwill letter is also unnecessary if your late payment isn't very late. Generally, companies won't report a late payment to the credit bureaus until it is at least 30 days late. If you've missed your payment deadline by a week but afterward you immediately pay it, you won't see that late payment reported to the credit bureaus. You may get a strike with your creditor. You may have to pay the penalty, lose a bonus or introductory rate, or otherwise deal with a fee according to the rules of the creditor, but you won't see damage to your actual credit score.

A goodwill letter is generally the best option if you have a single late payment that you missed for over 30 days but less than 90 days and when you have since both paid the outstanding bill and resumed regular payments. In other words, it works best for one-time, isolated incidents.

Will a Goodwill Letter Work?

Will a goodwill letter work? After all, creditors are usually large banks, and they have so many millions of customers that they don't necessarily have to care about you. What incentive do they have to keep you around, assuming you're not a business-level or millionaire-level customer?

The truth is, goodwill letters only work some of the time. It varies a lot depending on many factors, including:

Goodwill letters can be effective in cases of technical issues and personal issues. For example, suppose your auto-pay was somehow turned off, and you didn't notice a technical error with the creditor's computers failing to process a payment. In that case, a goodwill letter can potentially eliminate reporting the late fee.

Do Goodwill Letters Work

If you don't have your car for transportation, you may lose your job, which would jeopardize your ability to pay your bills, so you accepted the action that was most likely to keep you financially solvent. Similarly, if you had a brief but temporary financial hardship – a significant unexpected expense between paychecks, you can explain it and potentially get a waiver. For example, say you had a flat tire and needed to pay to get a new tire, which pushed your bank balance low enough you couldn't pay your bill until your next paycheck, which forced the bill into late payment status.

Whether or not a goodwill letter works is often up to the whims of chance. There's no formalized process across the industry.

Note iconNote: Some creditors will make public statements that they will not accept goodwill letters, usually citing the Fair Credit Reporting Act requiring them to report accurate information. It never hurts to try, and many of these creditors will still accept a goodwill letter. It's always worth a shot; the worst that they can say is no.

Remember that a goodwill letter is an emotional appeal to the individual capable of making decisions regarding your account. You'll need to keep that in mind as you craft your letter and focus on the hardship that made it impossible to make your payment on time (with the steps you're taking to resolve it).

How to Write a Goodwill Letter

A goodwill letter needs to be well-written and compelling to have any chance of success. It's an emotional appeal. Thus, there are some things it needs to contain and others it should not.

How to Write a Goodwill Letter

A goodwill letter should be courteous and friendly. The number one thing every goodwill letter needs is a positive attitude. Your credit score is serious business, and you may be feeling desperate or angry. However, you should avoid blaming the people who work for the creditor in question. Even if the issue is on the creditor's end, getting angry about it – specifically when that anger is directed at someone uninvolved with the matter – will only hurt your chances.

A goodwill letter should convey the depth of your relationship. If you've been banking successfully with this creditor for 15 years, say as much. Any deeper, happier, or more successful business-customer relationship will work in your favor. Creditors will often value their long-term customers and may be more willing to cut you some slack, especially when they can quickly look up your past payment history and see that this is a one-time incident.

A goodwill letter should take responsibility. In the end, your late payment is (usually) your fault. It may be unintentional, or it may have been a calculated risk in a time of financial hardship, but it's still a bill you were responsible for paying that you did not pay. Personal responsibility is a big part of a goodwill letter.

Note iconNote: if the reason your payment didn't go through is legitimately not your fault – such as when the creditor's computer systems broke or they didn't auto-debit your account as they should have, you may be able to get the issue sorted out with a phone call to support rather than a goodwill letter. After all, when it's genuinely their error, they are responsible for solving it.

Shifting the blame away from you when it's your fault looks juvenile and immature and makes your goodwill letter less likely to be accepted.

A goodwill letter should present a compelling argument. Present the facts of your case and why a higher credit score is required of you. For example, you might explain a scenario wherein you had to make the tough decision to let your account lapse after an unexpected medical issue or other expense. Present the length of your relationship with the creditor, your history of on-time payments, and any other supporting evidence. You're making the best of a bad situation and asking forgiveness.

Suppose you need a higher credit score for getting a mortgage or car loan; present that information to the creditors to support your case. After all, if the creditor can help you lower your other bills, you're less likely to experience delinquency again.

A Sample Goodwill Letter Template

If all of the above seems tricky to compose, you can always use a template. The question is, should you?

Sample Template

Templates are great for people who don't have the writing chops to craft something themselves. However, it's always possible that using a standard template could hurt your chances. Remember, the people who receive these letters often receive dozens or hundreds of them, and when they see the same template repeatedly, they may no longer see it as genuine.

That's why we've created this template. It's a unique template – not copied from other sources online – and since we're a smaller site, it probably hasn't been used very often. If you use it, let us know; we may be able to edit it periodically to keep it fresh. That said, here's a template you can consider using.

Remember, this should be in letter format. You should have your name, return address, and contact information in the upper left.

To whom it may concern, (note: if you can identify and send your letter to a specific person with decision-making capability, you can personalize this greeting.)

I wanted to thank you for reading this letter and giving me this opportunity to tell my story. My name is [name], and I have been a happy customer of [creditor] for [number of years] years. My goal with this letter is to maintain the cordial relationship for [number of years].

I recently pulled my credit report and found an entry where your company reported a late payment. [Details of the incident and payment.]

During this time, I experienced [reason for late payment] and was put in the difficult position of choosing which of several payments to let lapse temporarily while my finances recovered. No late payment is good, but I chose the one that least jeopardized my future ability to make payments on time. [Reason why you chose this one; for example, it was the lowest payment or the least directly impactful on your job.]

In light of my [number of years] history of on-time payments and the temporary, now-resolved nature of the issue that caused my failure to pay in the first place, I would like to request a goodwill adjustment to my credit report. I have also taken steps to prevent late payments in the future, such as enrolling in auto-pay.

[Additional details, such as why you need a higher credit score right away.]

Thank you for your time and consideration. Sincerely,

[Your name.]

[Your signature.]

Have I convinced you about the benefits of submitting a goodwill letter? Do you have any questions for me? Please drop your questions in the comments below, and I'll do my best to point you in the right direction! I'm happy to help, and your questions (and my answers) are bound to help others as well!