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Repair Bad Credit on Your Own

Unfortunately, credit repair companies do not have a magic wand that can magically remove all the derogatory items on your credit report. They do not have any more authority than you do. Everyone plays by the same rules that are set forth by the Fair Credit Reporting Act (FCRA), a FTC regulation.

When negative information in your report are correct and verifiable, only the passage of time can assure its removal. Accurate negative information generally can stay on your report for seven years.

If you find a negative item reported in error, initiate an investigation directly with the credit bureaus, and send them any documented evidence to support your case.

Tips for Rebuilding Your Credit

Let nature take its course.
Over time, your credit score will naturally improve as the past derogatory marks become outdated, and carry less weight on your overall credit profile. Lenders and creditors put most of the scoring weight on your current and open accounts.

Money management.
Making on-time monthly payments and keeping your account balances in moderate levels will help improve your credit score as well.

Payoff debts.
Payoff all existing past due accounts, including collections and judgments. Fresh collections and judgements can significantly damage your credit. The balance owed on these type of accounts also play a major role on how much your credit score is affected.

Minimize credit report inquiries.
It doesn't hurt to check your own credit, but frequent inquiries initiated by creditors and lenders may lower your credit score. So, try to cut down on applications that require your credit report to be pulled.

Pay with cash.
Even if you have credit available, you are more likely to change your spending habits by not using it. When you pay with cash or even a check, it forces you to recognize that the money you can spend is limited to the amount of funds you have in your checking account. Debit cards also serve this purpose, because the amount you spend is immediately deducted from your account. You will need to make choices about what you can afford to buy, and therefore you will have to determine your priorities. This sort of forced discipline should help you to better manage your credit.

Disputing Errors and Inaccurate Information

  1. Request credit reports from the three major credit bureaus: Equifax, Experian, and TransUnion. Thanks to the new FACT Act passed by the FTC, all consumers with a legal Social Security number are eligible to obtain a free credit report directly from the source. The website where you can obtain a free credit report is: AnnualCreditReport.com.

    If you've already used up your free credit report for the year, you are entitled to receive a free credit report if you have been denied credit within the past 60 days, or if you believe that you are a victim of fraud.

    Otherwise, you may order a Free-Trial Credit Report. If you wish not to be charged, simply cancel at anytime before the 30-day trial period ends.

  2. Read through each credit report, and make notes of every incorrect or inaccurate information that you find. You may find data discrepancies between the three credit bureaus. Do not worry about these discrepancies if they are not hurting your credit. Try to focus on correcting the negative information that are hurting your credit.

  3. Request an investigation through the credit bureau that holds the incorrect information about you. You can request an investigation in three different ways: via phone, mail, or internet website. We recommend you initiate a dispute by phone or mail if you have documented evidence that you can use to help prove your case. Otherwise, request an investigation through the appropriate website. Their contact information can be found on our credit reporting page.

  4. The credit bureaus are required to send you the results of the investigation, or at least response within 30 days of the initial dispute. Check your updated credit report to make sure that they've corrected the errors. If the results come back unchanged, then you will have to contact the creditor directly.

  5. Contact the creditor, and make sure that they have the correct information regarding your account. Explain your situation, and send them documented evidence to prove your case if applicable. Once the information is corrected in their system, have the creditor(s) forward the correct information to all three credit bureaus.

  6. Check your credit report again, and make sure that the negative information reported in error has been removed from your credit report.
Human-error and fraud are inevitable, but if you minimize the number of credit accounts you have, the less chances you have of falling victim to these incidents. Follow the steps above, and you'll be on your way to improving your credit. Remember that time and responsible money-management are the main keys to rebuilding great credit.

Remember to get your mail certified at the post office before you mail it out. By certifying your mail, you are requiring a return receipt from the recipient. It also documents the date of when your letter was received by the recipient. As you may know, dates play an important role in the world of credit law. The three major credit bureaus are governed by the Fair Credit Reporting Act (FCRA) which mandates that the credit bureaus have 30 days in which to at least reply to your dispute letter. If they do not respond within 30 days of receipt, they are in violation of the Fair Credit Reporting Act (FCRA).
Your correspondence with the credit bureaus should be short and concise. A good rule of thumb is to keep the reading time down to one minute or less. One minute is the average time that a credit bureau personnel will spend reading your dispute letter. If your correspondence is too long, there's a good chance that it won't get the attention that it deserves.

Adding a Consumer Statement to your Credit Report

If an investigation does not resolve the dispute to your satisfaction, you may submit a consumer statement of 100 words or less into your credit file. The law does not require the credit bureaus to add statements of circumstances that explains a period of delinquency caused by unexpected hardships, unemployment, illnesses, or emergencies which caused your income to be reduced or eliminated. This type of statement is usually given to a creditor when you apply for new credit; often called a Letter of Explanation.

The law, however, does require the credit bureaus to add statements about disputed information and reports they issue about you. If you request, the credit bureaus must also send a correction to anyone who received a report in the preceding six months if it was for a credit check, or within a two-year period if it was for employment purposes. It is legal for the credit bureaus to charge you for this service, but in most cases, it is offered free of charge.

Your Basic Rights under the FCRA

The federal Fair Credit Reporting Act is designed to regulate accuracy, fairness, and privacy of information maintained by the CRAs (consumer reporting agency). Below is a list of your basic rights under this law:


Can Credit Repair Companies Be Trusted?

Many "credit repair" companies claim to remove negative credit with the flick of a wrist. Their advertisements make bold assertions and money-back guarantees: "Bankruptcy, tax liens, judgments... no problem!! One hundred percent guaranteed!! Credit report 100% cleared in 30 days!!" Can they really make such sweeping guarantees?

While some credit repair companies are outright frauds, others are not fraudulent and they use the dispute process to obtain impressive results. In fact, they delete thousands of negative credit listings every day. There is a company called, Lexington Law that has a proven track record of helping consumers fight bad credit for over 15 years.

Unfortunately, it is risky to trust anyone to help you restore your credit. It is estimated that fraudulent credit repair companies have bilked Americans out of more than fifty million dollars. The majority of credit repair companies were started by entrepreneurs with a penchant for marketing. Consumers have flocked to these "credit doctors" only to discover that their advertisements proved far more impressive than their results. Hiring a credit repair company is like playing Russian roulette. Many of them are effective and legitimate, but it is difficult to tell a rip-off from the real article.

So, Can Credit Repair Companies Guarantee Results?

Not a chance! No credit repair company is so good that it can guarantee a specific outcome. It would be like a defense lawyer guaranteeing that the jury will find his client innocent. Guarantees are a sure sign of credit repair fraud. A warranty, where the credit repair company promises a refund if certain results don't occur, is a better, more realistic claim. Lexington Law is a well-established company that has received respect within the credit repair industry.

Not surprisingly, the credit bureaus have declared war against the credit repair companies and those selling instruction on how to do-it-yourself. The bureaus lambaste credit repair companies in the media and send anti-credit repair literature to anyone whom they suspect of using credit repair services. The bureaus unflinchingly deny that accurate information can be removed from a credit report.

The simple truth is that you do not have to endure bad credit for seven to ten years as long as you feel comfortable challenging the accuracy or verifiability of your credit listings. If so, it is possible to restore creditworthiness within a much shorter time.

However you decide to address your credit challenges, realize that regardless of what you may hear in the news media, thousands before you have sought help and restored their credit. They can show you their homes, cars, and credit cards. Despite the newspaper articles, TV reports, and other credit bureau propaganda to the contrary, the simple truth remains: you can restore your credit.

Credit Report Repair

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