Repair Bad Credit

Need to repair bad credit? You are not alone.

You may have been refused a loan or been offered one at an exorbitant interest rate. Perhaps you can’t get a credit card.

Someone has decided that your credit worthiness is ‘bad’. Well, you will have to fix it – it can sometimes be difficult but it is not impossible.

The main indication of credit worthiness is your FICO score which is a number calculated by the three main credit reporting agencies that records a number of important factors like outstanding debt, late payments etc. Your FICO score generally should be above 650, below 500 is definitely a case of bad credit.

In some cases you made need a credit repair specialist or a counselor, but in a majority of cases you can repair the credit problem yourself. The first thing to do is to get hold of your credit report from one of the main agencies such as Experian, Trans Union or Equifax.

Once you have this, review it with a counselor or other person who is knowledgable in these matters; and try to understand how your poor credit rating came about.

In some cases, bad credit is a result of irresponsible money management. But it often occurs because of unexpected financial hardship. One day you might have all of your bills current, and the next you could become disabled or lose your job. It can be quite frightening how easily this can happen.

And if  you fall behind on your debts, it will wreak havoc on your credit rating.

Credit repair agencies claim that they can remove bad entries from your credit report. But did you know that you can often have them removed yourself at a much lower cost?

There are two methods by which you may be able to get negative entries removed from your report.

Talk to the Credit Bureaus

The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate any item on your credit report that you dispute. If the information is found to be false, inaccurate or unverifiable, it must be corrected or removed from your report.

The bureaus have 30 days from the time they receive notice of  the dispute to complete their investigation.

If there is any inaccurate information on your credit report, a dispute is certainly in order. But some people have had luck disputing items that were in fact accurate, including judgments, collections accounts and repossessions.

If such items are not verified by the creditor (or the court in the case of  judgments) within the time limit for investigation, they must be removed.

If you decide to dispute a legitimate entry, simply write a letter to each of the credit bureaus stating that you dispute that entry. No explanation is required.

But keep in mind that if the entry is verified, it will remain on your report. And if the creditor verifies the information after the 30-day time limit, the credit bureau may reinstate the entry as long as they notify you at least 5 days before doing so.

Negotiate with Your Creditors

Dealing with creditors can be intimidating, especially if you’re not on good terms with them. But speaking to your creditors directly may help you get negative information removed from your credit report.

If you only have a late payment or two on your account, a creditor might be willing to remove the derogatory information once you’ve resumed a regular payment schedule.

If you’ve experienced repossession or had an account turned over to collections, payment in full might persuade them to remove the negative entry.

It sounds like a long shot, but you never know until you ask. Requests to remove late payment information may be made after you’ve brought you account current. But if you’re hoping for removal of a repossession or collection action, it’s best to negotiate a deal before you pay anything.

Get the Bad Entries Removed ?

There is no guarantee that disputing information on your credit report or negotiating with creditors will get negative items removed from your record. If  it doesn’t, the best thing you can do is try to build up some positive information on your report.

The first thing you need to do when trying to repair bad credit is bring past due accounts current. Try to work out a deal with your creditors to accomplish this, or talk to a credit counseling agency. But don’t miss payments on current accounts to put money toward those that are past due.

If it comes down to paying one or the other, keep the current account current.

Once you’ve brought all of your accounts current, put a priority on keeping them that way. Making your payments on schedule will raise your credit score, and with the passage of time, the good entries may outweigh the bad.

Credit repair is not impossible to achieve. And you don’t have to spend a lot of money to do it. You might consider buying credit repair software, talking with a qualified friend or locating a credit repair specialist or counselor.

Avoid engaging a credit repair lawyer unless you have a lot of  money to spare or an extremely difficult case of bad credit.