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Here's what this credit expert says he would do first if he had to start over with bad credit

John Ulzheimer, formerly of FICO and Equifax, suggests a triage process to repair your bad credit.

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John Ulzheimer is a well-known credit specialist with over 20 years spent working in the credit industry. He formerly worked for Fair Isaac Corp., the company behind FICO credit scores, and Equifax, one of the three main credit bureaus.

Needless to say, he knows a lot about what it takes to fix bad credit — a score in the FICO range of 300 to 579 or VantageScore range of 300 to 600.

Beyond not qualifying for the best credit cards, those with bad credit may also face a disadvantage in other areas of their lives, including struggling to rent an apartment, qualify for a car loan or get an affordable mortgage.

Select spoke with Ulzheimer about the first step he would take in repairing bad credit. Here's what he told us.

Start with 'triage'

"Step one in every credit rehabilitation journey would be the triage process," Ulzheimer says. "That's what I'd do first."

The world "triage" is a term most commonly used in a medical context. In a hospital, triage is a process used to determine which patients get care first when resources are limited or the emergency room is full. Doctors and nurses prioritize those with a more urgent need for medical attention who would greatly benefit from immediate care. The goal here is to save the most lives.

Ulzheimer wants you to apply the same triage process to fixing your bad credit: Determine what in your credit report is contributing the most to your bad credit score. "This is important because there are different paths to a lower score and, as such, there are different paths to improving your credit," he says.

You can pull your credit report for free from Experian, Equifax and TransUnion on a weekly basis at AnnualCreditReport.com.

How to check your FICO® Score for free

FICO credit scores are used in over 90% of U.S. lending decisions, which means it's arguably the most important credit score for you to know.

You can access your free FICO® Score through your bank or credit card issuer, like American Express, Bank of America or Citi. Online resources like *Experian Boost™ and Discover Credit Scorecard (available to Discover cardholders only) also provide free access to anyone, regardless of whether you're a cardmember.

How looking at your credit report can help your bad credit

Your credit report serves as a snapshot of your overall financial health. Reading through it, you can find your personal information, current and historical credit accounts from the past seven to 10 years (including their statuses, balances and payment histories), inquiries and public records.

Here's how you can apply Ulzheimer's triage process when you pull your credit report:

There are five key factors that make up your credit score:

  1. Payment history
  2. Amounts owed
  3. Length of credit history
  4. New credit inquiries
  5. Credit mix

You'll want to see where you stand in each of these categories. For example, perhaps you see on your credit report that you have a variety of credit products, such as a credit card and student loans, so you know your credit mix isn't what's setting you back.

Instead, your credit report shows that you haven't been paying your credit card bill on time each month. Given that your payment history is the most important of all factors in determining your credit score, this is what you would want to focus on fixing ASAP to improve your bad credit.

"Triage will allow you to see everything negative that's on your credit reports," Ulzheimer says. "It will also allow you to see what your scores look like before you've begun, and exactly why they aren't higher. Until you know these things, you're just guessing as to what you need to do to improve your credit."

When reviewing your credit report, also look for any inaccurate information. About a quarter of Americans have an error on their credit reports, which can lower your credit score and impact your chances of qualifying for new credit in the future.

Make it easier to keep an eye on your credit reports by signing up for a credit monitoring service that alerts you in real-time of any changes to your credit. Select ranked CreditWise® from Capital One and Experian free credit monitoring as the two best services for consumers at zero cost.

Bottom line

Your first step in repairing bad credit is knowing what makes it bad. To use Ulzheimer's triage method, pull your credit report to see what factors most contribute to your poor credit and focus on fixing those first.

Fixing bad credit often takes time. Past-due accounts (late payments) that you see stay on your credit report for up to seven years. Late payments also negatively impact your credit score for as long as they remain on your report, but the good news is their impact lessens over time.

Don't despair though: There are steps you can take that will help you see an improvement in your credit score month over month, including paying on time, lowering your credit utilization ratio and reporting any mistakes on your report.

Have no credit whatsoever? Start building credit with this top-rated credit card

The Discover it® Secured Credit Card is made for those who are new to credit or looking to build theirs back up. The card has no annual fee and a rewarding cash-back program. Plus, Discover will make a dollar-for-dollar match of all the cash back you earned in your first year of being a new cardholder.

*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

For rates and fees of the Discover it® Secured Credit Card, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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