How to Repair Credit: A Guide to Improve Credit Scores

A Guide to Improve Credit Scores
 

Just the thought of looking at your credit reports may make you cringe but credit repair does not have to be difficult. Credit repair can take from 90 days to 9 months, depending on the amount of negative information in your credit files.

The amount of time it takes to repair your credit is well worth it and the benefits will be immeasurable. The economy is improving and banks are making credit more available. But consumers who were adversely affected by the economic downturn no longer have the credit scores for approval. Bad credit doesn’t necessarily prohibit you from getting credit cards, a mortgage, auto or personal loans, but it can make it difficult to obtain. And, even if you are able to obtain credit, the interest rates may be higher due to lower credit scores.

Mistakes and errors in a credit profile can be serious enough to result in a denial of credit. The good news is there are steps you can take to repair your credit report and improve credit scores.
 
 
Below are Steps to take in repairing credit:

 
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(1) Know the Consumers Laws

Get to know the laws enacted to protect consumers from unfair practices of creditors, collection agencies and credit reporting agencies. The following federal laws are essential in credit repair:

Fair Credit Reporting Act – is primarily designed to guarantee the information supplied by the major credit bureaus as well as other consumer reporting agencies is accurate.
Fair Debt Collection Practices Act – protects consumers from abusive or harassing treatment by debt collectors and establishes guidelines for the industry.
Fair Credit Billing Act – establishes procedures for resolving billing errors on credit card accounts.
Direct Dispute Rule – allows consumer to dispute inaccurate information directly with furnishers of that information.

Your State will also have laws that may be useful in credit repair so be sure to check your state laws.

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(2) Get Organized

Repairing your credit is going to involve lots of paperwork that you will need to retain, sort and file. Once you start the dispute process the credit reporting agencies will be sending you updated reports and you must keep all of your records and correspondence. It is also crucial that you keep track of all dates, deadlines and reminders when entering into the dispute process.

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(3) Order Credit Reports
 
There are three major credit reporting agencies that you will need to obtain a credit report from in order to begin the dispute process. The three major credit bureaus are Experian, TransUnion and Equifax.

The reason you need all three credit bureau reports is that not all credit reporting agencies contain the same information. Mistakes and errors will have to be dealt with individually on each credit report.

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(4) Opt-Out
 
Personal information such as your age, gender, residence, income and credit score are now searchable to lenders who can purchase your information to offer you credit. It may sound like a good idea but this can lead to identity theft, unsolicited offers and most of all, debt collectors contacting you.

When you opt out, you make it more difficult for lenders and others to access and profit from your private credit information and financial dealings. Credit is an essential part of American life and you should be in control of your information. Another good reason to opt-out is if you are applying for a mortgage loan and have an unpaid, older debt, debt collectors will come out the woodwork because they know mortgage lenders require collection accounts be paid before escrow closes. Read more about opting out.

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(5) Review and Analyze your Credit Reports
 
Once you receive your credit reports make copies. You want to be free to make notations and highlight items directly on the copies. Do not write on your original credit reports.

The information in your credit reports are coded in different ways across the three major credit reporting agencies. Do not become overwhelmed with the amount of information contained in the reports. Review and analyze one report at a time.

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(6) Dispute Negative Credit

It is very common for credit files to contain errors, inaccurate, outdated and obsolete information. Never assume negative information will somehow automatically drop-off. You have the right to dispute any negative credit information in your credit reports; including names, addresses, telephone numbers and employment information. All of your disputes should be in writing as you want to create a paper trail in case you have to file a lawsuit in the future. Get tips on how to write a credit dispute letter.

 
 
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(7) Deal with Past Due Accounts
 
Since payment history is 35% of your credit score having even one past due account can significantly lower your credit score. The more recent the late payment, the more detrimental to your credit score.

When repairing your credit you want past due accounts to be reported as a current, never late; paid, never late; or deleted. There are several ways to deal with past due accounts, find out one way in how to dispute late payments.

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(8) Decrease Credit Balances

The amount of debt owed makes up 30% of your credit score. Credit utilization includes how much you owe on all of your accounts and how much of your available credit limit have you used. High balances on your credit cards, especially balances that are near or over the limit, decreases credit scores. Decreasing credit card balances to thirty percent (30%) or lower of your available credit limit will raise your credit scores.

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(9) Add Good Credit
 
A necessary step in repairing credit is adding good credit to your reports. There are unsecured, secured and retail credit cards along with loans for less than perfect credit. These are all good options as long as you can afford payments and the interest rates are competitive with the market.

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Credit One Bank® Credit Card with Gas Rewards
 
The Credit One Bank® Credit Card is a good option to add positive credit to your reports. Cardholders get unlimited 1% cash back gas rewards and automatic reviews for credit line increase opportunities. Build better credit with on-time payment history reported to Experian, Equifax and Transunion.
 
 
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Finally, if the thought of do-it-yourself credit repair is overwhelming and you prefer a professional, Lexington Law can assist. Lexington Law helped clients remove 4,833,329 negative items in 2013 alone. Those negative credit items included: Bankruptcies, Foreclosures, Tax Liens, Repossessions, Judgments, Collections, Late revolving credit payments, and Inquiries. Call for a free credit repair consultation today (877) 587-4574.



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