There are a lot of credit repair companies out there that promise to improve your credit score, for a price. But are they doing anything for you that you can't do yourself? Should you pay someone else to do these things?
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There are businesses out there that promise to improve your credit score for a price. But are they doing anything for you that you can’t do yourself?
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There are quite a few credit repair secrets your creditors and the credit reporting agencies do not want you to know about. When you start taking measures to repair your credit, it can cost both the creditors and the reporting agencies a great deal of money.
There are many different credit repair secrets they do not want you to be familiar with, but the one we want to focus on here is the ability to dispute negative items on your credit report.
You can significantly improve your credit by disputing the negative items you find on your credit report. Using a correctly formatted letter is the way to accomplish this, and when you do so it is always a good idea to keep a copy of the letter you send.
You may also want to send along a copy of your credit report so they can see where the problem is. The following are a few simple steps to help you effectively dispute the negative items on your credit report.
Step #1 – Get a Copy of Your Credit Report – Once you have your report, make sure you look it over for any mistakes. For every separate listing on your report, check out the information to make sure it is really yours.
At times you may find a wrong listing will end up on your report, so if you take care of these first, it will probably help to get rid of the other negative items.
Step #2 – List the Items You Want to Dispute – After taking care of wrong listings, then you can start looking at the negative items on your report and make up a list of things you want to dispute. You should put the most harmful items at the top of your list to be taken care of first.
Then it is time for you to start writing. Each separate item should be addressed in a separate letter, and you should be sure to send the letter to each of the credit reporting agencies. Remember, this is one of the many credit repair secrets because agencies do not want to be disputed, but doing so is legal and will help to repair your credit.
Step #3 – Personalize and Use Strong Language – One of the reasons these credit repair secrets are so “hush hush” is because creditors and credit reporting agencies do not want to investigate or get rid of the negative items on your credit reports.
You are going to have to use strong language and a great letter to get through to them. Although they may give you some trouble and tell you that you are not allowed to dispute items, remember what you are doing is legal and they are required to investigate the problem. Let them know with your words that you mean business.
It will take a few weeks for everything to get underway, but after the credit reporting agency investigates, then a new credit report should be issued. Make sure you check out your report to be sure negative items have been taken away. This is one of the best kept credit repair secrets, but once you learn how to use it, you can effectively repair your credit report.
Do you have a low credit score? If so, you’re not alone. Thousands of Americans, buffeted by the recession, are facing lower than average FICO scores. Since most Americans have, on average, a credit history of 14 years and 13 credit obligations, the capacity for error can be great. In fact, since the average American has approximately $19,000 in credit to manage, it helps to know how you can avoid getting lower credit scores, or how to improve your existing one.
In this article, we discuss how bad credit happens and what steps you can take to repair your low credit score.
How Bad Credit Happens
More than 25% of Americans have credit scores below 600, which is commonly referred to as the dividing line between good credit and bad credit. How do they get into this predicament?
There are four steps most consumers take on the road to poor credit:
- Overuse of credit – the higher your balance, especially relative to your credit limit, the lower your credit score will be.
- Late payments – a single late payment (over 30 days late), can dock your credit score by as much as 110 points.
- Debt management tactics – short sales, deeds in lieu of foreclosure, settlements, and other debt reduction practices can decrease your credit score by as much as 85 to 160 points. Bankruptcy can drop your score another 130 to 245 points.
- Actions by the credit card issuer – your credit scores will fall if your lender cuts your credit limit or pursues any collection activity.
Understanding Credit Management
It’s important to know there’s a right way and a wrong way to manage credit. Less than 50% of Americans have ever been 30 days late on a payment, but 30% have been 60 or more days late, and 20% have had an account closed by the creditor. So obviously proper credit management practices should be implemented by at least half of all consumers who are using credit.
Credit utilization in the United States breaks down in this way:
- 40% of credit holders carry less than $1000 balance on their accounts;
- 48% carry approximately $5,000 or less as a balance;
- 37% carry less than $10,000 in non-mortgage related debt;
- 15% carry more than $10,000 in debt.
Repairing Credit – What You Should Know
You can repair your credit score by taking the following actions:
- Pay all your credit card and other bills every month;
- Begin paying down your high credit card balances;
- Exhaust all other avenues before allowing foreclosure to happen or declaring bankruptcy.
Repeatedly requesting your credit report can lower your score. Be sure to challenge any false or incorrect information on your credit history, which you can obtain by getting your free credit report on an annual basis. The total amount of credit you have isn’t really what counts; instead, lenders look at your available credit when calculating your score. If you want to repair your credit, a debit card won’t help your score, but it can help to rein in your spending habits.
Knowing how to avoid credit repair scams can save you a lot of time and money. There are some legitimate companies that can be helpful, such as credit counseling services, but if you end up with a fraudulent company, you’re bound to be out quite a lot of cash. In reality, a sure-fire way to avoid these scams is to repair your own credit.
These scams involve promises of cleaning negative credit information from your credit report. There is no legal way to do that, so don’t believe the hype. Other things to look out for are companies which charge fees before they provide a service, and companies which recommend you start a new identity to get a fresh credit report. These companies may also tell you to dispute all items on your report in hopes the loan provider will not respond to the dispute, resulting in the removal of the item. They may advise you to avoid direct contact with the reporting agencies so you do not learn the truth about their scam.
You can repair your own credit, and you do not have to waste money paying someone else who only offers promises. For starters, you can request a free credit report from each of the credit reporting agencies. You are entitled to one free report per year, and a free one anytime you are refused credit; so do not pay a company to give you your report. Check the report for accuracy. If you find erroneous items, send a letter to the reporting agency stating which item you’re disputing, and why. Be honest and do not dispute just hoping to get things removed.
After that, you need to start building good credit. It will cost you extra in interest fees, but you can provide your own credit repair by paying on a new loan or credit card. Get a secured card and keep up with it according to the agreement. While you are building your credit with it, other items will eventually fall off your report. Most unpaid items disappear after seven years.