Repairing Your Credit

Your credit rating says a lot about you. But just because you've had less than perfect credit in the past, doesn't mean you can't improve your rating and move on. Learn how credit agencies work and read about tips to deal with debt.

What is Credit Repair?

"Credit repair" is a general term often used to describe a systematic process of rehabilitating an individual's creditworthiness, or financial credit reputation. The process is generally initiated by obtaining copies of the individual's credit report, reviewing the credit report for errors, omissions, and misleading information, and requesting corrections to such information by means of a formal dispute. Many laws, regulations, and practices govern this process, and many organizations exist that will assist in guiding individuals through this sometimes complex process, though much, if not all, may be accomplished by individuals by their own efforts.

Basic Credit Repair Strategy
The basic strategy to repairing your credit is as follows:

That's all there is to it. Seems easy enough but you must have patience, because the credit bureaus are not always very cooperative. They make their money by providing credit reports to lenders not by fixing bad information in their databases.

1. Get your credit report.

   Obtain free copies of your Credit report.

2. Analyze your credit report.

   After reviewing your credit reports, highlighted everything what you think wrong.

3. Rank questionable/negative items

  Step 2 covered how to identify items, both positive and negative on your credit report. Now you have this list, you should rank each item according to the amount of damage they are doing to your overall credit picture. Rank the most damaging information first, followed by the next most damaging information, followed by those items which are neutral. Do this for each credit report, as remember, they may not all have the same information on them. They may even have duplicate information. If this is the case, you will need to write to each credit agency individually for each duplicate item.

The items here are listed in order of descending importance with the first item being the "most damaging" to your credit.

  • Bankruptcy
  • Foreclosure
  • Repossession
  • Loan Default
  • Court Judgments
  • Collections
  • Past due payments
  • Late Payments
  • Credit Rejections
  • Credit Inquiries

Also, if your creditor has NOT notified you of negative information they have recently placed on your credit report, they are currently in violation of the Fair Credit Reporting Act.

4. Requesting Corrections and Disputing Your Credit

  • What should you challenge?
    Everything, and you should always shoot for a complete deletion. Don't bother challenging the information within a collection listing, charge-off, court record, repossession, foreclosure, or settled account. As the basic nature of these listings is negative, changing the information within the listing will yield no improvement. Severely negative listings, such as these, must be disputed on the basis of complete deletion or not be disputed at all.
  • What items are the toughest to get off your report?
    You will have the toughest time getting bankruptcies and foreclosures off of your credit report as these things are so easy for the credit bureaus to verify. In the case of a bankruptcy, you most likely will have a few trade lines saying "included in Bankruptcy".

5. Make sure you send everything registered or certified mail.

This is important, as you must be able to tell when letters were sent and received.

6. Document Your Credit Repair Efforts

As soon as you have ordered your credit reports and photocopied your order letters and checks, you must create a precise organizational system to track your correspondences with the credit bureaus and your creditors. Why is this necessary? Unfortunately, credit items you have worked so hard to remove mysteriously reappear. If this happens, it is usually easy to have the items deleted permanently if you show your complete records on the first removal. Why take a chance? As you proceed through these steps, keep copies and records of all correspondence you send and receive. Copies of all correspondence are a must, as well as notes on all telephone conversations! Also, if you should encounter any special difficulty and would like help in repairing your credit, you will need these records to proceed.

Every time you have a telephone conversation with a creditor, you must document the conversation by recording the name of the person to whom you spoke, his or her position, the date and time of the conversation, what was said in the conversation, and what was agreed upon.

7. Wait for the credit bureau to finishing investigating

Once the credit reporting agency has received your dispute letter, they are obligated to investigate. This obligation is not contingent upon you having been denied credit. According to the Fair Credit Reporting Act of 1997, the credit bureaus must take the following steps:

  • The credit reporting agencies must resolve consumers' disputes within 30 days limit
  • In response to consumers' complaints that documentation in support of their disputes was disregarded, the credit bureaus have to consider and transmit to the furnisher all relevant evidence submitted by the consumer the first time.
  • Consumers will receive written notice of the results of the investigation within five days of its completion, including a copy of the amended credit file if it changed based on the dispute.
  • Once information is deleted from a credit file, the credit bureaus can not reinsert it unless the entity supplying the information certifies that the item is complete and accurate and the credit bureau notifies the consumer within five days.

8. Evaluate the results of your repair efforts.

You did save the original credit report your ordered, didnít you? And each item you challenged? Good, you will need them to evaluate how well you did. Itís all part of Step 5 above, documenting your efforts.

When you get your ďrepairedĒ credit report back from the credit bureaus, they will summarize what changed on your credit report due to your challenges. You can compare this list to your own notes or just to the previous credit report.

Tips for resubmitting your credit dispute
  • Be persistent! Become more insistent, but not more threatening, with each dispute. As you submit one dispute after another, it may become increasingly difficult to get the checker to initiate an investigation.Your first one or two disputes should be friendly and polite. Just like any other consumer, you can become frustrated and threatening as time passes. You may threaten to hire an attorney, But donít overdo it.
  • Be creative - Create and utilize other techniques that help further the idea that the dispute letter is from a truly wronged and disadvantaged consumer. The checker is only interested in investigating disputes that truly are erroneous and damaging. Again, because the agencies are flooded with requests, they tend to give priority to those that seem most urgent.
  • Do not bombard the credit bureaus with disputes (about the same listings, that is) - Do not bombard the credit bureaus with disputes. Sending one dispute right after another is wasteful and counterproductive. You may wind up alienating the credit agency so that they hold up your progress. (Remember, they cannot legally stop you from restoring accurate information but the people who run the agencies, like anyone else, probably do not respond well to harassment.) Also remember, that credit repair is a time-consuming operation requiring great patience. The rule of thumb is to wait 60 days between disputes of the same listing.

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