Credit Building Tips

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 processes they use easier. These are the credit repair software/apps/programs, and they're accessible to pretty much anyone.

The question is, which ones 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 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 agencies 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 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 programs you can try out.

1: DisputeBee

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.

2: Credit Versio

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 them 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

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

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: TurnScor

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.

6: Credit Detailer

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.

7: Dovly

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. 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.

8: Credit Karma Money

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, 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 dispute previous blemishes on your credit. You'll have to use one of the other platforms on this list or simply do it yourself.

9: You Need A Budget

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.

10: Experian Boost

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.

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!