How to Repair Bad Credit
No matter how bad your credit is, there are always steps you can take to make it better. Everyone's situation is unique, so what might be the best thing for you right now, may not be the best thing for someone else.
To repair bad credit, you must find a starting point. The best way to do that is to obtain a copy of your credit reports from the 3 major consumer reporting agencies, also known as credit bureaus. You will also want to know what your FICO scores are.
Once you have your reports, you'll want to make sure all the information is accurate. There are mistakes in about 75% of all credit reports. If you find an inaccuracy or any negative accounts that you are unsure of, dispute it with the credit bureaus. It's important to note that whether the account is actually yours or not makes no difference on their responsibility to verify it. If the account can't be verified, it must be deleted.
Many of times the credit bureaus, who get thousands of disputes each day, don't do a very thorough job of investigating items you've disputed. So, it may take a few rounds of letters until the credit bureaus remove the account. Be patient and wait at least 30-35 days before sending another round.
Another thing you should do is pay off the most recent past due accounts. Be careful making payments on accounts that are more than a few years old as paying them can bring your scores down even further because it makes the negative account current. You will also want to try to get an agreement with the creditor to update it to "paid as agreed" or remove the account BEFORE you pay it. It's much harder to get it updated or removed after you pay it because you don't have much leverage.
Another important part of raising your credit scores is to keep your existing balances below 40% of your credit limit. You'll also want to minimize the number of inquiries you make by not applying for credit unless absolutely necessary.
For more information on the best credit repair services, check out Top-10-Credit-Repair.com.
For the best do-it-yourself credit repair book, check out The Credit Secrets Bible.
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How to Repair Credit
The good news is that no matter how bad your situation is, there are many ways to repair your credit. To repair credit, you must find a starting point. The best way to do that by grabbing a copy of your credit reports from the 3 major consumer reporting agencies - Equifax, Experian and TransUnion. You will also want to know exactly what your credit scores are.
Once you have your reports, you'll want to make sure all the information is accurate. More than 75% of all credit reports have erroneous information in them. Look for any negative accounts on your credit report that might be inaccurate. Highlight them and include them in a dispute letter to the consumer reporting agency that is reporting them. If you are unsure of whether an account is inaccurate or not, or if there is any question in your mind that it doesn't belong there, request an investigation. Whether the account is actually yours or not makes no difference. If it can't be 100% verified - it must be deleted.
Give the CRAs time to conduct their investigation - 30 to 40 days is sufficient. Once you receive the results of the investigation, check to see which negative items have been removed. If items have been verified, you can send them a procedural request to request the exact methods they used to verify the information. You will want to keep using this process until you have achieved the desired results.
Another thing you should do is pay off any balances that you are past due on. This only pertains to accounts that are less than 180 days and have not been charged off yet. Don't make payments to accounts that have been charged off as paying them can bring your scores down even further because it makes the negative account current.
For older accounts that you were not able to get removed by disputing, you may want to send the creditor a pay for delete letter. A pay for delete letter is simply a request to delete the item from your credit report in exchange for payment in full. Always send the request in writing and obtain their agreement in writing before sending payment.
Learning how to repair credit is a must for anyone who has been less than responsible with their credit in the past. Your credit rating is an essential component of your financial well-being and something that you should always be willing to fight for.
If you would like more information on how to repair credit and remove negative items on your credit reports such as charge offs, visit AAACreditGuide.com.
