Means of Successful Credit Repair


The best way for a person to complete credit repair is by ordering a copy of his or her credit report from the three credit bureaus, identifying problems, and then requesting that the bureaus make appropriate changes. Every person is allowed one free copy of their credit report for this very purpose, going through the credit repair process, as well as having protection from identify theft.

Along with the formal process of credit repair, people can also make a few changes and do a few things that will improve the FICO score. The problem with bad credit is that it stops people from being approved for credit, it results in the person paying higher interest rates, and it could even mean someone being passed over for a job in that more and more, employers are looking at applicant?s credit history.

For starters, one step involved with credit repair is that a person that charges on credit cards needs to stop. While this might be hard for some people, credit cards should be used only in situations of emergency and nothing more. All credit cards should be put in a drawer or better yet, cut up. Now, another interesting aspect of credit repair is that a person can hang onto one card, preferably the one he or she has had longest but the balance needs to be paid off in full.

Another credit repair tip is that people should not apply for any credit. What happens is that every time a person applies for a loan or credit card, regardless of type, the creditor runs an inquiry. This inquiry is to each of the three credit bureaus with the purpose of looking at the applicant?s credit history. This information would show the creditor if the person is a good borrower or a bad risk. When too many inquiries are run on a person?s credit report, creditors view this as a bad thing, making it appear as if that individual were having serious financial trouble and desperately trying to get money, even if untrue.

Next, the credit repair process involves getting all open accounts current. In addition to credit cards, this would also include loans of all types, medical bills, and even any outstanding payday, cash advance, or car title loans. In other words, anything being reported to one or all three credit bureaus should be paid off. Financial advisors suggest that for credit repair, people start with the highest interest rate account, in that this is the one costing the person the most money. With payment history accounting for 35% of the FICO score on the credit report, this is imperative.

Just as bad accounts should be brought current, credit repair would also involve keeping any accounts in good standing open. Often, people pay off a credit card account that had been paid on time and schedule, and then close the account. However, keeping an account such as this open would help boost a person?s overall credit score. Therefore, as a person goes through the credit repair process, good accounts that have been paid off should be left open, even if the credit card is never used.

People going through credit repair should also make sure they do not miss something being reported to the credit bureaus. Many debts are reported and people have no idea. To identify these accounts, the individual could order his or her free credit report or pay for a copy and then go through each line item carefully. Chances are that one or more things would be on the report the person was unaware of, whether good or bad.

Even contacting creditors can be a part of the credit repair process. If someone is facing an emergency or unexpected situation in which a payment would be late, rather than ignore the creditor, the individual can explain the current situation to see if the creditor can help. Often, creditors can provide extensions, restructure loans, and offer other solutions that would not result in a negative report on the person?s credit history.

Credit repair could also come in the form of professional assistance. For example, a person might consider working with a professional at a credit counseling company. These companies are designed to work as a liaison between debtor and creditor in negotiating lower payments, better interest rates, longer payoff schedules, and even payoff balances. This means getting credit under control so the credit report is not damaged further.

Additionally, in some instances, credit repair might simply mean taking out a cash advance, payday, or car title loan as a means of getting an overdue bill caught up. To avoid an account being reported negatively, the individual might take out just enough money to bring the bill current. Since most of these lenders also report to the credit bureaus, paying the short-term loan off quickly would also help with credit repair in that once paid, the lender would send positive feedback.