How can I repair my credit? Credit is a necessity in today’s life, so having creditworthiness is crucial. People with poor credit ratings may be required to pay security deposits, may have higher interest rates, and may not be able to qualify for any type of financing.
The first step to repairing credit is to check with Equifax, TransUnion, and Experian for an updated credit report. Creditors often do not report to all three agencies, so each credit score may fluctuate from the others.
The second step to repairing credit is to determine what needs repaired. The most common types of information in need of repair are:
– Delinquent accounts, charge-offs, or collection accounts.
– Maxed out accounts over the credit limit.
– Incorrect information that was reported in erro
If there is need to dispute any information in a credit report, it can be done via phone, online or snail mail. Snail mail is the recommended form of communication, as there is a paper trail. It is a good idea to send via certified mail, so there is receipt the dispute was received. Include a copy of the credit report with the item in dispute highlighted and any proof or documentation that supports the dispute.
The third step is to analyze any past due accounts and strive to pay them current or paid in full. A charge-off is one of the most damaging account statuses that can be reported on a credit report. Once an account has reached charge-off status, the account is 180 days past due and the past due balance cannot be paid to bring the account current. Charge-offs will remain on a credit report for seven years. The balance can be paid in full to show the account balance as $0. Another option is to attempt to settle the debt for less than the original amount. Also be sure to take care of any collection accounts, as these accounts damage credit as well.
The last step to repairing credit is to get new credit. Try opening a major credit card or a retail credit card. If credit is denied by these, try a secured credit card. It requires a security deposit and is a great option for people who are trying to rebuild their credit.
If none of the above steps are a viable option, there are debt management and consolidation programs available to get on the right track and help your credit. If debt management and/or consolidation are not feasible options, filing bankruptcy is the only other option available. Bankruptcy will remain on a credit report for seven to ten years, so be sure to consult an attorney to talk about available options.