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 can be immeasurable. Since the credit crunch, mortgage, auto and personal loans have become more difficult to obtain, not to mention credit cards.
Even if you are able to obtain credit, lower credit scores do not get the best interest rates which can cost you money. The credit reporting agencies make mistakes all the time and according to a study by PIRG (Public Interest Research Group), as many as 79% of credit reports contain errors.
It is imperative that you know what type of information, true or false, exists about your credit habits. Low credit scores may prohibit you from obtaining a mortgage, auto loan and credit cards.
Below are 9 steps to take in repairing credit:
(1) Know the Consumers Laws
Familiarize yourself with the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Fair Credit Billing Act. These laws and rules protect consumers from unfair practices of creditors, collection agencies and credit reporting agencies.
(2) Get Organized
Repairing your credit is going to involve lots of paperwork that you will need to retain, sort and file the paperwork. 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 imperative that you keep track of all dates, deadlines and reminders when entering into the dispute process.
(3) Order Credit Reports
Ther
e 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.
(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 a crucial part of American life and you should be in control of your credit information. Another good reason to opt-out is if you are applying for a major purchase such as home or car and have outstanding debt because it can trigger a debt collector coming after you. Read more about opting out.
(5) Review and Analyze your Credit Reports
Once you receive your credit reports, make copies. You want to be free 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.
(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 negative credit any information in your credit report, 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.
(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.
(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.
(9) Add Good Credit
An essential step in repairing credit is adding good credit to your report. There are subprime credit cards, retail credit cards and secured credit cards and loans. These are all good options as long as you can afford payments and the interest rates are competitive with the market.
The Orchard Bank® MasterCard® is an excellent choice for people looking to build their credit and the Orchard Bank® Visa® Credit Card can also help you get your credit back on track by reporting monthly to all three major credit bureaus giving you the opportunity to rebuild your credit with good payment behavior!
Finally, if the thought of do-it-yourself credit repair is overwhelming and you would prefer a professional repair your credit Lexington Law helped clients remove 1,297,226 negative items in 2010 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.
