Repairing Your Credit

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October 20, 2020

Repairing credit involves taking measures to increase one’s credit score. Possessing as high of a credit score as possible proves beneficial in circumstances such as buying a car, financing a house, or obtaining a personal loan. “Good credit” opens doors to larger borrowing amounts and better interest rates. On the flipside, institutions view people with low credit scores as riskier investments and may even deny them a loan or a credit card altogether.

Examining Your Credit Report

Credit bureaus keep records of various actions that influence your overall credit score. The possibility exists that some of the things on your history are inaccurate, and these mistakes could harm your credit score./p>

Thus, the first step in repairing credit is asking for a free copy of your credit report from the three main bureaus -- Equifax, Experian, and TransUnion. Information can differ, so it’s best to check all three.

The Federal Trade Commission estimates that about 20 percent of people have at least one error on their credit report, so examine documents carefully. Highlights of the checklist the FTC created for consumers reviewing a credit report include:

• Verify all personal information.
• Check that the accounts on the list are ones that are still open and that accounts you closed by choice are listed as “closed by consumer.”
• Watch that the same account is not listed multiple times.
• Ensure current balances are correct.
• Verify that any late or missed payments listed actually did occur/
• Look out for old negative information that is still being reported (matters you cleared up or data that is over seven years old).

If you spot something that seems wrong, contact both the credit reporting bureau and the institution that provided the incorrect information (such as a bank or a credit card company). Disputes can be made online or by certified mail. Include all relevant personal information in your correspondence, and clearly outline the problem spotted. Attach copies of any supporting documentation. Once received, investigations take about 30-45 days plus about another week to report the resolution to you.

Working with a Credit Repair Company

Many people perform credit repair measures on their own. Others find the process time-consuming or confusing and instead turn to the services of credit repair companies. While these businesses do charge a fee, consumers may find their assistance and thoroughness money well spent, especially if their actions lead to a greatly improved credit score.

As prices can differ substantially, shop around before hiring a credit repair company. Doing research also aids in finding a reputable business that explains things in understandable terms. You’ll be answering questions about your credit history throughout the process, so search for a company that makes you comfortable.

Be leery of any organization offering a quick fix. Credit repair does not happen overnight. Also, watch out for promises to raise your score for a certain price. Negative information that is accurate, timely, and verifiable cannot be removed legally no matter who submits the request or how badly you may want those events purged. Run away quickly from anyone suggesting you lie, provide misleading information, or create a parallel identity.

Note too that the Credit Repair Organization Act (CROA) prohibits credit repair companies from charging before they’ve performed services. The act also says a consumer has the right to cancel a contract within three days of signing for any reason.

If you achieve a higher credit score either through your own actions or with the assistance of a credit repair company, keep it that way. Pay off bills on time, protect your identity against theft, and monitor your credit report at least once a year to catch anything wrong before it affects your score.