The Best Tools for Credit Repair


Credit seems to make the world go round. If your credit score is in the tank, then you're suffering from a dramatic loss of purchasing power. You can feel left out of society to an incredible extent. Without a good credit rating, you cannot get a credit card. You cannot apply for a loan. You cannot purchase a new car. You cannot buy that first home for your budding family. How do you get your credit score back out of the bowels of the abyss? Actually, you can find numerous tools to help you with credit repair, as well as companies specializing in this form of assistance.

What is credit repair? Your credit score is based on several things. First, it is based on your credit history. This is everything within the past 7 to 10 years that you have purchased through credit ? magazine subscriptions, car loans, school loans, book clubs, etc. Your credit history says a lot about you as a consumer. It tells lenders how likely you are to be late with your payments, as well as how likely you are to abandon your debt and leave them holding the bag. Your credit history also tells lenders how often you've moved, which can be a warning sign.

Does credit repair consist solely of removing bad debts from your record? No, repairing your credit is much more than wiping away an old debt. Repairing your credit is a lengthy, involved process that can take a very long time if you do not do it properly. Many consumers are tempted by companies that promise to wipe their debts away or even to give them a new identity. However, these are poor choices for use during your quest for credit repair.

Credit repair companies can be beneficial, but they can also leave you in legal hot water. For instance, some companies recommend that you get a new Social Security number, while others recommend that you use an EIN rather than your Social Security number. Both of these constitute fraud and can lead to steep fines and even jail time ? don't do it. If you find a company that says these are the methods you should use, avoid them at all costs. Winding up in jail is not the right way to begin repairing your credit and gaining back your purchasing power.

You must also understand that any methods used by a credit repair company can be accomplished by you ? at no charge. You can obtain a free copy of your credit report (you get one per year, from each of the three major credit bureaus). You can dispute old debts, inaccurate information and more on your credit report. No credit repair company can wipe your slate clean or eliminate real debts from your report. Do not believe any company that claims otherwise.

The most important factor in credit repair is to remove old, outdated or incorrect information from your credit report. Often, this involves dealing with creditors or with debt collection agencies. These companies are less-than likely to listen to you. Here, a credit repair company can come in handy, especially if they make use of attorneys in their communications. This can result in those inaccurate items being removed from your credit report in short order. This alone will bring your credit score up considerably.

However, you cannot repair your credit totally, as long as legitimate debts remain on your credit report. How do you deal with these debts? The best way is to pay them off, of course. Yes, you'll have to give the money you owe to the company in question. Before you simply mail off the bill though, contact the company and ask about reducing your debt in exchange for immediate payment.

If your creditor agrees, you can take out a short-term payday loan and make the payment. This eliminates one debt from your report and you can repay the loan on your next payday. Obviously, this is much more beneficial than paying the entire debt, one small payment at a time. You can then use the same process for each debt remaining on your credit report and enjoy immediate credit repair. As each debt is removed from your report, your credit score will go up, correspondingly.

Don't think your job is done once you've paid off your last debt, though. You'll need to get another copy of your credit report (you can either wait until next year or pay for another copy) and ensure that all debts paid have been removed from the list. One benefit of using a credit repair company during this process is the fact that they often provide you with unlimited copies of your credit report for a nominal fee, which can be a dramatic benefit in your quest to rebuild your credit rating.