Frank Collins is a seasoned writer on financial topics such as credit repair, investment and stock trading.
Many people live with bad credit because they don’t know how to get started with credit repair. Indeed, the world of credit reports and scores can be difficult to understand, but taking it one step at a time is the best way to start repairing your credit and improve your credit score.
Credit repair starts with checking your credit. A credit check consists of two steps – checking your credit report and checking your credit score. Your credit report is a compilation of your credit accounts and their account history. Your credit score is a numerical grade, so to speak, of your credit report data. You can check your credit report for free by visiting AnnualCreditReport.com and purchase your credit score through myFICO.com or one of the three credit bureaus – Equifax, Experian, or TransUnion.
Review your credit report. Your credit report contains all the details causing you to have bad credit. Review your reports to learn what’s dragging your score down. For each negative account, decide what you can do to fix that account – dispute it, settle it, or leave it alone. In some cases, you may have to let negative information age and fall off your credit report.
Dispute credit report errors. You have the right to dispute errors on your credit report. The dispute is a letter to the credit bureaus specifying which information is incorrect and why. If you have proof, include a copy of that proof with your dispute letter.
The credit bureau is required to investigate your dispute and then reply either with a change to your credit report or a letter explaining why your credit report was not changed. If your credit report isn’t changed after your credit bureau dispute, you can go straight to the source and dispute the error with the company that listed the error on your credit report.
Work out a plan to get rid of past due negative accounts. Collection accounts, past due balances, and charge-off accounts hurt your credit score and your ability to get new credit until they’re either paid off or fall off your credit report. If these accounts are recent, you have several years before they fall off your credit report, and it’s better to pay them. You don’t have to pay delinquencies all at once, especially if you don’t have all the money. Instead, put together plan to pay off accounts as you come up with the money. That may mean putting money in a savings account until you accumulate enough to pay off these accounts.
Negotiate pay for delete. Some of your creditors may be willing to stop reporting negative accounts in exchange for full payment on the account. You can send a letter or make a phone call to make your request. If the creditor agrees, always get the agreement in writing before you make payment.
Add positive information. Even after you take care of negative credit report information, you’ll still need positive accounts and timely payment history to raise your credit score. Secured credit cards and retail store cards are good ways to get new credit card accounts added to your credit report.
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