Repairing bad credit can seem like a slow and time consuming process. Patience and knowledge of how it didn't happen overnight is required. Understanding the credit system and how your credit reports are perceived through the eyes of creditors is crucial when you begin this process of improving your scores. Unfortunately, there are millions of Americans who learn too late just how the credit system works. Believe me - they end up paying the price for this lack of knowledge.
When a consumer asks the question, "How do you repair bad credit?" it's often after they've been denied financing for their dream home and then discover it's too late. Their income is sufficient and they're good people who deserve the opportunity to live the American dream. Unfortunately, their low credit scores are proving to be a major setback. It's only after leaving a car dealership or their bank after having been denied they realize their scores are too low. Either way, it's traumatic and heartbreaking. It prevents us from living the life we want to live.
The good news is that regardless of how bad your situation is, there are many ways to repair your credit. The first step is contacting the three major credit bureaus - Equifax, Experian and TransUnion. Request a copy of your credit report as well as your FICO scores so that you have a clear snapshot of where you are and can measure your progress as you move through this process.
Once you've received your credit reports, you'll want to ensure the information is accurate. Nearly 79% of all credit reports include errors. These errors can mean the difference of hundreds of thousand of dollars in interest. It's then you realize how serious this is.
Look for any negative accounts on your credit report that are inaccurate. If you are not 100% certain of an account's accuracy, highlight them. Any uncertainty or questions in your mind of whether they belong on your report, request an investigation. Include these items in a dispute letter to the credit bureau that is reporting the account.
Give the credit bureaus ample time to conduct their investigations. According to the FTC, thirty days is sufficient. Once you receive the results of the investigation, review your credit report again to what's been removed. If there are any items that have been verified, you can then forward a procedural request to determine what methods were used to verify the information. You will want to continue this process until you have achieved the desired results.
This is only method of credit repair and there are many more. Learning the steps to repair bad credit is a must for anyone suffering from a bad credit rating but wishes to improve it. After all, your credit rating is essential to your financial well-being and you should be willing to fight for it.
Saturday, September 27, 2008
5 Steps You Can Take Right Now to Repair Bad Credit
There are many simple ways to repair bad credit. Everyone has had at least a few damaging accounts within their credit reports. It's difficult to not have ever experienced a blemish. Life happens and we must react accordingly. A temporary rating setback is common for nearly everyone. The key is to not stress too much about it. Just as your credit scores can be damaged easily, they may also be repaired. Following are five tips that you can implement today that will reflect positively on your scores.
Tip Number 1:
Know what you are dealing with. You have a right to request an annual report free of charge, from each of the three major reporting agencies (also known as a tri-merge). Equifax, Experian and TransUnion are the three big players. Requesting a revised report every four months will empower you to catch errors early on, thereby allowing you to investigate and request erroneous information be removed. If you are not aware of these negative items, you can do little to repair them.
Tip Number 2:
Dispute negative items on your credit reports. Federal laws dictate any negative items on your credit reports that cannot be substantiated or verified within a 30 to 45 day window of being disputed, the item must be removed. If for any reason in the chain of verification the process fails to complete, you may then insist its immediate removal. Roughly 40% of all disputes are not verified!
Tip Number 3:
If you have active credit cards, a few sacrifices may be required to pay the balances down to either a zero balance or perhaps a lower balance. The second most important variable for computing your credit score is how much of your available credit is being used. If your credit cards are maxed out and you make only the interest payments - even if these payments are made on time - it can still reflect negatively on your credit report. Keep your credit card balances at around 30% of the available limits and pay the balances in full each month. This is a great way to repair bad credit scores.
Tip Number 4:
Ensure your monthly payments for credit cards, bank loans, mortgages, utilities and others are made on time each month. This is by far the most important variable in the algorithm that calculates your scores. The best way to ensure you're able to do this is to not extend yourself into situations that will prevent on time payments. One single late payment can drop your credit report score by 100 points or more! It seems incredible, but it's true. The fact that a negative mark is so easy to acquire should tell you how important this is. Ensure timely payments are made as part of your efforts to repair and then maintain your credit scores.
Tip Number 5:
Live below your means! If you cannot afford it, don't buy it. It is unwise to go into debt for unnecessary extravagances such as big screen televisions. Save your money and then pay cash.
Repairing bad credit can certainly enhance your abilities to live the lifestyle you desire. You must be proactive, patient and have a solid plan. Protect your credit rating! This is one of the most important aspects of survival in a capitalist society such as the U.S. Begin your efforts to repair your credit scores today.
Tip Number 1:
Know what you are dealing with. You have a right to request an annual report free of charge, from each of the three major reporting agencies (also known as a tri-merge). Equifax, Experian and TransUnion are the three big players. Requesting a revised report every four months will empower you to catch errors early on, thereby allowing you to investigate and request erroneous information be removed. If you are not aware of these negative items, you can do little to repair them.
Tip Number 2:
Dispute negative items on your credit reports. Federal laws dictate any negative items on your credit reports that cannot be substantiated or verified within a 30 to 45 day window of being disputed, the item must be removed. If for any reason in the chain of verification the process fails to complete, you may then insist its immediate removal. Roughly 40% of all disputes are not verified!
Tip Number 3:
If you have active credit cards, a few sacrifices may be required to pay the balances down to either a zero balance or perhaps a lower balance. The second most important variable for computing your credit score is how much of your available credit is being used. If your credit cards are maxed out and you make only the interest payments - even if these payments are made on time - it can still reflect negatively on your credit report. Keep your credit card balances at around 30% of the available limits and pay the balances in full each month. This is a great way to repair bad credit scores.
Tip Number 4:
Ensure your monthly payments for credit cards, bank loans, mortgages, utilities and others are made on time each month. This is by far the most important variable in the algorithm that calculates your scores. The best way to ensure you're able to do this is to not extend yourself into situations that will prevent on time payments. One single late payment can drop your credit report score by 100 points or more! It seems incredible, but it's true. The fact that a negative mark is so easy to acquire should tell you how important this is. Ensure timely payments are made as part of your efforts to repair and then maintain your credit scores.
Tip Number 5:
Live below your means! If you cannot afford it, don't buy it. It is unwise to go into debt for unnecessary extravagances such as big screen televisions. Save your money and then pay cash.
Repairing bad credit can certainly enhance your abilities to live the lifestyle you desire. You must be proactive, patient and have a solid plan. Protect your credit rating! This is one of the most important aspects of survival in a capitalist society such as the U.S. Begin your efforts to repair your credit scores today.
Subscribe to:
Posts (Atom)