Like most things in life, credit is a lot easier to destroy than it is to rebuild. There is no quick fix for a poor score; however, if you’ve noticed inaccurate or outdated information on your credit report, you are legally entitled to have it corrected. If your credit report contains negative information that is accurate, you can still restore your creditworthiness by making a serious effort to repay your existing bills and debts.
Keeping Up With Your Credit
The first step to improving your creditworthiness is knowing where you stand. All Americans are legally entitled to one free credit report every 12 months from each of the three national reporting agencies, Equifax, Experian and TransUnion. You can order reports from all three at once, or you can request them individually throughout the year.
Anytime you are denied credit, or any service related to your credit such as insurance, you can also request a free credit report within 60 days. You may qualify for an additional free credit report if you are seeking employment, are on welfare or if you’ve been a victim of identity theft.
Correcting Mistakes on Your Credit Report
If your credit report includes information that you believe to be false or incomplete, you should request an investigation. You can try to tackle this process on your own at no cost, but many people prefer to hire a credit repair company for assistance to ensure the best results.
To dispute an item on your credit report, you must submit requests in writing to
both the reporting agency and the information provider. Explain which information you believe to be inaccurate, and include photocopies of any documents that support your case. If the investigation proves that you are correct, the information provider must let the credit reporting companies know right away. Either way, you’ll receive a written notice from the credit reporting agency when the investigation is over. Upon your request, the agency will then notify anyone who has checked your credit within the past six months of the correction.
Rebuilding Bad Credit
Time heals most wounds, including bad credit scores. Once a company accurately reports negative information about you, such as your defaulting on a loan, it can remain on your credit report for up to seven years after the event. Bankruptcy claims remain on your credit report for ten years. Waiting for those issues to go away won’t instantly give you a perfect credit score, but if you stay on top of your existing debts, your credit score will rise over time.
Keep in mind that having a poor credit history doesn’t necessarily prevent you from accessing credit, but you’ll likely pay higher interest rates. Every company has their own standards, and they may look for different things when assessing your credit report. They may only consider your recent financial activity and cut you a break if you’ve demonstrated continued improvement in paying your debts. Don’t hesitate to ask potential creditors about their standards.
Think Carefully Before Going Bankrupt
Filing for bankruptcy may be an effective way to get a handle on your debts, but it carries some serious consequences. If you’re considering bankruptcy, you must obtain counseling from a government-approved agency before you file. Visit the United States Trustee Program website to locate a government-approved credit counseling agency in your state.
How to Get Legitimate Credit Repair Help
In addition to guiding you through the dispute process, credit repair services can also help you develop a realistic debt repayment plan. They may provide one-on-one counseling, educational materials or workshops focused on budgeting and improving financial management skills. Carefully research companies before trusting them with your credit.
The Credit Repair Organizations Act prevents credit repair companies from making unrealistic promises or demanding advance payment, and all credit repair contracts must be provided to the customer in writing. While these services can be immensely helpful, fixing poor credit will nonetheless require time, responsibility and discipline on your part.