steps to do-it-yourself credit repair
Blotches on your credit report cost you. But, don't
despair. It's never too late to become credit worthy -- just get
started, and remember that it won't happen overnight.
Here are 5 steps for improving your credit rating:
1. Order your credit reports
Find out what the top three credit bureaus -- Equifax, TransUnion
and Experian -- are saying about you. It's likely that they're all
slightly different. Yes, different! Creditors don't have to report
to all three credit bureaus, so they typically report to the credit
bureau to which they also subscribe.
Time and money is wasted, says Steve Rhode, president
and co-founder of Myvesta.org, if you only order a report from one
credit bureau. You can order a credit report from each bureau. Costs
vary from state to state, but in most states, it costs around $9
to get your report.
If you've been denied credit, insurance or employment
because of your credit report, you are entitled to a free copy of
your report from the reporting agency. The company you applied to
must supply the credit bureau's name, address and telephone number.
You have 60 days after receiving the denial notice to request your
2. Examine your reports carefully
Nearly every consumer has an error on at least one credit report
from one of the major credit bureaus, says Rhode. Credit bureaus
generate your report on information they receive from your creditors;
they don't verify.
Keeping your credit report a true reflection of you
is -- like it or not -- your job. Get ready to clean and polish.
Carefully look for everything from typing errors, outdated and incomplete
information to inaccurate account histories. You'll want to make
a thorough list of items you dispute and why. Be meticulous.
Here's how to read and understand your credit report.
If the negative information in your report is true,
only time and improved habits can change that. Late payments and
charged-off accounts remain on your report for seven years; bankruptcies
for 10. Most creditors, however, look for a pattern of payment rather
than focusing on one-time or rare occurrences; so consistent on-time
bill payments will improve those blemishes.
3. Double-D strategy -- dispute
Remember, a bad report costs you money. So, it pays to be thorough!
You can either complete the dispute form provided with your credit
report or write a letter. Clearly identify each mistake and state
why it's wrong. A recommendation is to send a photocopy of your
credit report with the mistakes circled to the reporting credit
bureau. Include copies of supporting documents.
Document, document, document. Keep copies and records
of all the forms, letters and documentation that you send the credit
bureaus, plus dates sent. The credit bureau must investigate any
relevant dispute within 30 days of receiving your letter. Any item
that is not verified as accurate by a creditor is removed.
Sometimes it's necessary to contact your creditors
to resolve mistakes. Bankrate's 7 steps to fixing your credit report
will help you tackle the serious errors.
If the credit bureau makes any changes to your credit
file, it will send you the results and a free, updated copy of your
credit report. Once a negative item is removed from your report,
the credit bureau cannot put it back on unless a creditor verifies
its accuracy and completeness -- and sends you written notice.
4. Solve and dissolve debt
Now's the time to devise a spending plan that reduces your debt
and sets you up to pay on time, every time.
If you're having difficulty making payments, be proactive.
Call your creditors and negotiate to keep your accounts current
and from being reported as delinquent or "bad debt." You
can ask for reduced monthly payments, or even change due dates to
balance out your monthly bills.
The same strategy can be used for fixed-loan payments.
Remember, though, that this is a short-term strategy. You'll pay
more interest to extend the repayment schedule, but it allows you
to stay current and save your credit rating. Use the extra money
to pay off debts one at a time, gradually increasing payments to
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