Repair Credit Score

You know you need to repair credit scores, but you’re not sure how to go about it. Before you spend your hard earned money on a credit repair agency, here are some tips to help you on your way to a better credit score.

The first thing you may be tempted to do if you have a low credit score is to hire a credit repair agency. While some of these agencies are legitimate, many are not. Signs that a credit repair agency is a scam include:

• The agency asks for money before they provide any services.
• The agency doesn’t provide you with a list of your legal rights.
• The agency advises you to dispute all of the information in your credit report, even the positive items.
• The agency advises you to obtain an Employee Identification Number and use it instead of your social security number on credit applications.

A credit repair agency that is worth its salt will tell you what they are able to do legally. What they can do for you is dispute incorrect negative information on your credit file. When an item is disputed, the company that reported the negative item has 30 days to respond. If there is no response within that 30-day period, then the negative item has to be removed from your credit report. What many credit repair agencies do not tell you is that a company may respond after 30 days and any valid negative information can be re-inserted into your credit report.

You may initiate a dispute of an item on your credit report yourself. Many people think they need to hire someone to look at their credit file and process disputes on their behalf. The fact is you can dispute negative items and repair your credit score yourself.

The first step to repair your credit score is to get a copy of your credit report from the three credit bureaus in the United States. The credit bureaus are:

• Experian
• TransUnion
• Equifax

If you were recently denied credit, you should receive a letter from the company that declined your credit application. The letter will include the credit bureau that was used and that bureau’s address. Write a letter to that bureau requesting a copy of your credit report and include the name of the company that denied you credit. The report doesn’t cost anything if you include the name of the company that denied your credit application. Alternatively, you can request a copy of your credit report from any of the agencies for a small fee. You also qualify for one free copy of a credit report from each of the three agencies on an annual basis.

Once you have a copy of your credit report, pay attention to the information that explains how to understand the rating symbols. Pay particular attention to items that are listed as charged-off items. These items, as well as bankruptcy, do the most damage to your credit score.

After reading your report and discovering the negative items, you have two options: dispute the negative items if they are invalid or acknowledge your credit problems and learn from your mistakes.

To dispute an invalid negative item, write a letter to the credit bureau. The letter should list each item that you are disputing and why you are disputing it. For example, if you think an account isn’t yours, state this clearly. Include the name of the account and the account number in your letter.

The credit bureau will respond to your request and provide you with a copy of your amended report if the disputed item is removed.

Everyone makes mistakes when it comes to their credit. One way to avoid some of the common mistakes is to educate yourself about how credit works. If you want to repair your credit score, start with the basics:

• Pay your accounts on time every month.
• Pay more than the minimum due whenever possible.
• Don’t apply for more than two or three lines of credit each year.
• If your account falls past due, ask for help and contact the customer service center for payment options.

It is possible to repair your credit score; though it may take some time, depending on how many mistakes you have made. It typically takes five to seven years for negative items to fall off of your credit report. Bankruptcies can take up to ten years to fall off. In the meantime, learn good budgeting skills and manage your remaining credit wisely.

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