How to Repair Your Credit

Good Credit ScoreHaving a good credit score is more important these days than ever before. More than likely there are those that currently have a poor or less-than-acceptable credit rating are wondering if there are ways to improve or upgrade their score. The answer is certainly in the affirmative. Negative or derogatory information on a credit report will cost the consumer plenty in terms of paying higher interests rates, being denied approval on a much needed loan, or even landing a better job. The following outline of steps can go a long way in improving a credit score. With some patience and concentrated short-term focus, anyone can improve their credit picture to gain long-term benefits, and while it won’t happen quickly, getting started is usually the toughest hurdle.

Obtaining the Credit Reports

Get Your Credit ReportFirst and foremost is getting copies of the credit reports from all three credit reporting bureaus – Experian, Equifax, and TransUnion. It is absolutely vital to know and understand what each agency’s report contains about the consumer, and each report will more than likely have different information and credit scores, depending on which creditors are reporting to which bureau, and how extensive each credit history is compiled. Any consumer can order a free report from each bureau at no charge once every year. If they have recently been turned down for a loan application or insurance, or even employment, there is a sixty-day window of opportunity to access the copy of the report for free.

Review the Credit Reports

review credit reportCredit bureaus compile their data based on the reports they receive from each creditor, and not all creditors report to the same bureau, nor do they verify the information they receive. It is very important to examine each report very closely for accuracy, simply because the information contained in each report determines the credit score, and incorrect data will likely yield a lower rating if it reflects a negative story. Keeping it accurate and truthful is the consumer’s job, and it becomes a reflection of whatever credit picture it reveals. Only time and better credit management will improve this picture. Late payment history, bankruptcies, and charge-offs will remain on the report for up to ten years. Make a thorough and detailed list of all errors, inaccuracies, and out-dated information. Creditors look for patterns of negative or positive payment behavior, so be very meticulous when reviewing the information.

Documentation and Disputes

Documents and DisputesDetail and document each and every discrepancy in each of the credit reports. Thoroughly identify every incorrect entry and detail the reasons for its inaccuracy. Gather all supporting document and records to verify the mistakes and inaccuracies. Photocopy all records and the credit report itself with each error clearly identified. Document each and every form of correspondence, letters, and invoices pertaining to the issue, as well as any significant dates. Contact individual creditors to attempt to rectify any problems or inaccuracies as well. All disputes, along with the supporting documents, should be sent to each corresponding credit bureau. Disputes can also be done on-line at each of the bureau websites. Each credit bureau must investigate all inaccurately posted reporting, and subsequently remove any unverified information within thirty days of receiving the disputed notification. If the process proves to be successful, any changes to the credit report will be sent back to the consumer with the appropriate corrections. Any discrepancy that is removed cannot be re-entered into the credit report unless that specific creditor re-verifies the accuracy of the information, along with a written notification to the consumer.

Rebuild Your Credit Rating

Rebuild Your CreditEvery consumer can also begin the process of improving their existing credit scores while the dispute process goes on by adding positive credit activity and demonstrating a trend toward financial stability. If the credit report lacks a sufficient history, it is wise to contact any creditor who does have credit information available about them, such as local businesses or banks, or retail accounts, and ask them to report the account information and repayment history. Make sure that opening any new accounts will provide the reporting information as well. Applying for secured credit cards is also a great way to establish a positive repayment history, though it is best to limit the number of applications because the credit bureaus watch for the quantity of ‘inquiries’ which can have an adverse affect on the credit scores. Opening a savings account at a local bank will also demonstrate a positive move toward rebuilding a consumer’s credit score, which is exactly what any prospective lender views as not only good financial responsibility, but shows a reserve of funds which can be applied to any debt repayments.