Proven Methods of Credit Repair


While most people understand the value associated with good credit, some have no idea until they find themselves in a situation where they are denied credit. Although good credit has been critical for years, in the past two years, it has become even more vital.

For example, a person with good credit has what is known as ?buying power?, meaning he or she can purchase a dream home, new car, or something else of importance. However, many top companies are now using a person?s credit to determine if he or she should be hired for an open position, feeling that individuals with good credit are more responsible. For this and many other reasons, anyone with less than perfect credit needs to consider options for credit repair.

The good news is that an individual now has multiple options for credit repair that will make a huge difference when it comes to buying or securing a new job. The following are five proven methods of credit repair that a person should consider.

1. Do Not Procrastinate ? Many times, an individual becomes so overwhelmed with bad credit that the thought of going through a system for credit repair seems too daunting. The truth is that the longer an individual waits to fix the problem the worse it will become. For this reason, a person needs to take immediate action and not procrastinate when it comes to credit repair. In addition to obtaining a copy of credit reports from all three credit bureaus (TransUnion, Experian, and Equifax), a person could also become approved for a secured credit card or consider taking out a payday loan. Making payments according to the contract will begin to build new credit while bad credit is corrected.

2. Credit Card ? Another helpful method specific to credit repair is for a person to pay closer attention to credit card balances. The credit report score, known as FICO, takes into account credit card balances and the credit limit on each card, especially for credit cards that have only been opened within the past 12 months. The key here is that a person needs to keep balances under 20% of the credit limit. In other words, for a credit card with a $1,000 balance, the cardholder should never allow the owed balance to go over $200. Keeping balances low will make a substantial difference in how credit is being reported.

3. Credit History Disputes ? One of the most effective methods for credit repair is for a person to order a copy of his or her credit report, again from all three agencies. With reports in hand, the individual would go through detail line-by-line, making note of inaccuracies, omissions, and mistakes. However, rather than just shoot off a long letter to the bureaus disputing errors the person needs to work through the system the right way. Each problem should be highlighted and then a one-sentence note written regarding the specific error. Copies of the highlighted reports along with a two-paragraph letter would be sent to the respective bureau so corrections could be made. Credit bureaus receive thousands of disputes daily so by law, they have up to 30 days to respond. Handing credit repair properly will improve a person?s chance of getting expedient resolution.

4. Reporting Period Limits ? Along with taking steps for credit repair with credit reports, an individual also needs to look at the reporting dates. The reason is that different derogatory information reported can legally stay on a credit report for a specified period. As an example, bankruptcy can stay on a credit report up to 10 years whereas a judgment for 7 years. Even so, the date the information was reported would not be the same as the official court date. Once the expiration date for derogatory information has expired, the person needs to start the credit repair process immediately, pointing these dates out to the credit bureaus while providing proof in the form of legal documentation.

5. Collector Challenge ? Unfortunately, creditors make mistakes and it is the right and responsibility of each person going through the credit repair process to contact the creditor and discuss the problem. If an individual sees something wrong, whether misinformation on the monthly statement or information reported to the credit bureaus, the creditor should be contacted and challenged. This might require patience and perseverance but with this method of credit repair, the outcome would be better credit.

In most cases, the various processes of credit repair take time. Therefore, an individual needs to understand that corrections do not happen overnight. Additionally, some creditors are great at making quick changes while others do not seem to take their time. For this reason, a person might need to contact the creditor or credit reporting agency several times before the credit repair process is complete. Sometimes, a person has to fight for what is right when it comes to credit repair but considering all the benefits associated with good credit, the time and effort is worth investing.