A couple years ago when I discovered my credit score had been damaged by errors and from being an identity theft victim, I was tempted to get help from a “credit repair” company to repair my credit. You’ve seen the ads making all kinds of wild claims. Since I figured my case wasn’t too extreme, and I’m a bit of a tightwad, I decided to fix the credit report on my own, but since then the credit repair industry has literally exploded…and much of it is shady.
This post is my five step guide to credit restoration to show you how to fix your credit report and avoid the scams whether you do it yourself, or hire a credit repair firm.
Step #1 of Credit Repair: Avoid the Scams
Just like my Grandma would say, “if it’s too good to be true, then it’s probably a scam.” This goes for credit repair companies who make promises like:
- â€œCredit problems? No problem!â€
- â€œWe can erase your bad credit â€” 100% guaranteed.â€
- â€œCreate a new credit identity â€” legally.â€
- â€œWe can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!â€
Be especially weary of companies that suggest that you do things that are not in good conscience like creating a new identity or applying for loans using false information; these could actually end up with you committing a crime.
In short it is impossible to repair a credit report by removing, legally at least, any negative information from your report that is actually true. For that you’ll have to actually fix the problem or wait for 7 years.
Step #2 of Credit Repair: Know Your Rights
- Youâ€™re entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action.
- Each of the nationwide consumer reporting companies, the credit bureaus: Equifax, Experian, and TransUnion – is required to provide you with a free copy of your credit report, at your request, once every 12 months.
- You can dispute mistakes or outdated items for free.
Step #3 of Credit Repair: Dispute Inaccurate Information
You can and should raise a formal dispute of any items on your credit report that you feel are inaccurate. These can include:
- Accounts that you did not open
- Items that are more than seven years old
- Items that you have repaid or fixed that still appear
- The consumer reporting companies must investigate the items that you formally question within 30 days
Using the form letter provided in the references section below, you can send copies (not originals) of all supporting documents to the reporting agency.
Step #4 of Credit Repair: Get Help (if needed)
If you feel lost or want to aggressively repair your credit, there are helpful resources which do provide very useful information which can speed the process (just remember the guidelines in step 1 above).
Credit counseling organizations can advise you on how to create a budget, manage your debts and your money in a positive way. Often there are locally certified services, and it is great idea to check these out as a good step towards a total credit restoration plan.
I discovered this free eBook which offers a lot of very useful tips for money management and credit repair. Topics include:
- 10 Extra â€œFinancialâ€ Identity Protection Tips
- Why You Should NEVER Own A Debit Card
- Five Things Every Married Person Should Know Before Signing Any Credit Application
- Is Your Credit Score Costing You A Fortune?
Download a copy of the Free Credit Secrets eBook.
Step #5 of Credit Repair: Follow Up Regularly
This is a very important step. Even if you are successful in having a error or negative mark that you have corrected removed from your credit report, it happens regularly that these negatives can actually undo your credit fix by reappearing on your credit report. For example it can happen if you pay a debt collector but the collection company doesn’t communicate to the original company that you owed the debt to.
Besides being vigilant and correcting errors on your report to repair credit, only paying off debts by following a debt management program will build up your credit score and save you a lot of money on loan and insurance costs.
Make sure you check out the other in depth articles we provide on this topic: Credit Repair Services, Repair Bad Credit, Credit Counseling, Credit Report Repair, Credit Restoration, Credit Score Repair, Bad Credit, and Fix Credit Reports which outline the many facets of credit repair and point to more resources to keep your credit score high and your interest rates low.
Resources For This Article
- An Attorney’s Guide to Credit Repair
- Credit Repair: Self Help May Be Best
- Choosing a Credit Counselor
Sample Dispute Letter
Your City, State, Zip Code
Name of Company
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Enclosures: (List what you are enclosing)