Don’t let anyone fool you into thinking you need to hire a professional to repair your credit. The truth is, there is nothing a credit repair company can do to improve your credit that you can’t do for yourself. So, save yourself some money and the hassle of finding a reputable company and repair your credit yourself.
7 STEPS TO FIX YOUR CREDIT RIGHT AWAY
1. Get the latest copies of your credit reports:
Before you can start repairing your credit, you have to know what you need to repair. Your credit report will contain all the information you need to start repairing your credit. You’re entitled to free credit reports from each of the three credit bureaus each year. You can also order your credit reports directly from the credit bureaus for a fee.
Why should you order all three credit reports? Some of your creditors and lenders might report only to one of the credit bureaus. And, since credit bureaus don’t typically share information, it’s possible to have different information on each of your reports. Ordering all three reports will give you a complete view of your credit history.
Make an extra copy of each report in case you need to dispute information.
2. Review your reports:
Read through your reports once you get them. Become familiar with the information contained in each. Using different color highlighters or pens, highlight what you need to repair:
· Incorrect information, including accounts that aren’t yours, payments that have been incorrectly reported late, etc.
· Past due accounts that are late, charged off, or have been sent to collections.
· Maxed out accounts that are over the credit limit.
3. Dispute inaccurate information:
You have the right to dispute any information in your credit report that isn’t correct. When you ordered your credit reports, they should have come with instructions for disputing credit report information. If not, you can send a letter to the credit bureau detailing the inaccurate information. It’s often helpful to send a copy of the report with incorrect information highlighted.
4. Tackle past due accounts:
Since payment history makes up such a large part of your credit score, several past due accounts have a significantly negative effect on your score. Taking care of these is crucial to improving your credit score. Your goal is to have all your past due accounts being reported as “current” or “paid.
· Get current on accounts that are past due, but not yet charged-off. Do what you can to keep accounts from getting charged off.
· Pay off charge-offs.
· Work with debt collectors to take care of your collection accounts
5. Bring maxed out accounts below the limit:
Your credit utilization – your total debt compared to total credit – makes up 30% of your credit score. Having maxed out credit cards costs credit score points (not to mention costly over-the-limit fees). Bring maxed out credit cards below the credit limit by at least 30%, then continue working to pay the balances off completely.
Credit Limit Example: Credit Card Limit = $1,000 Balance should be no more than 30% or $300 dollars.
6. Get new credit:
After you’ve resolved the negative items on your credit report, work on getting positive information added. If you have some credit cards and loans being reported on time, good. Continue to keep those balances at least 30% of your limit and make your payments on time.
On the other hand, you might have to re-establish your credit by opening up new accounts. Since past delinquencies can keep you from getting approved for a major credit card, only make three applications. This will keep your credit inquiries low. If you get denied, try applying for a department store credit card. If still no luck, consider getting a secured credit card from one of the sites below.
http://www.creditinfocenter.
7. Tips:
· Salvage what you can. Don’t sacrifice accounts that are in good standing for accounts that are not. Continue making timely payments on all your current accounts.
· No one can remove negative information if it is accurate, even for a fee. Only incorrect information can be erased from your credit report. Accurate negative information remains a part of your record for at least 7 years from the time it is reported (10 years for bankruptcy). Don't believe any company that promises to remove negative information; there is no legal way to do so.
· You can't create a second credit file. Don't believe anyone who offers to help you get credit by creating a second credit file using a tax-id number or a second social security number. This is sometimes called "file segregation." It's illegal, and you could be subject to serious penalties.
DETAILED
Your Rights Regarding Credit Repair:
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
- You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
- Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on www.annualcreditreport.com , call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
- It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself:
Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
- make false claims about their services
- charge you until they have completed the promised services
- Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
- the payment terms for services, including the total cost
- a detailed description of the services the company will perform
- how long it will take to achieve the result
- any guarantees the company offer
- the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
1. The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
2. It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
3. It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
For More Information
To learn how to improve your credit worthiness and find legitimate resources for low or no-cost help, please see the following publications at ftc.gov/credit.
- Your Access to Free Credit Reports — explains why it is important to monitor your credit history, how to request a report, and how to dispute errors.
- How to Dispute Credit Report Errors — Explains how to dispute and correct inaccurate information in your credit report. Includes a sample dispute letter.
- Building a Better Credit Report — Learn how to legally improve your credit report, how to deal with debt, how to spot credit-related scams, and more.
- Knee Deep in Debt — Discusses options to help you get back in the black, including: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy.
- Fiscal Fitness: Choosing a Credit Counselor — Defines debt repayment plans, explains the differences between secured and unsecured debt, and offers questions to ask credit counseling agencies if you consider using their services.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit www.Ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
HELPFUL CREDIT REPAIR LINKS:
http://www.bankrate.com/brm/
http://credit.about.com/od/