How To Fix Your Credit In 5 Steps 7 May 2012 | By chane

When you first sit down to figure out how to fix your credit, the prospect can seem overwhelming. There are many new rules and regulations to learn if you aren’t already familiar with the way credit and credit repair works. Fortunately, there is a 5-step process you can go through to get on the right track and fix your credit with the help of a reputable credit repair agency. All the materials you need are probably already in your home — a phone, a way to keep notes (pen and paper is fine), and your financial documentation. This last can be anything from payment receipts to invoices and everything in between that is correspondence between you and your creditors. Your financial documents are essential to the process, so if you haven’t been keeping good records, now is the time to start. However, your most important tool is your willingness to actually do the work to get it done.  

Five-Step Plan to Fix Your Credit

Step 1: Assess Your Situation

Get your credit file. This can be done in a number of ways. You can get a free copy of your report annually, but you may be entitled to a second copy, depending upon the state you live in. It is also your right to get a copy of your credit report any time you are denied credit. You can request any of these free copies either online through the annual credit report website, or by writing in to the three bureaus. If you are working with a credit repair company, they may or may not be able to pull your credit file on your behalf. Make sure to ask if their service counts as a “hard” inquiry to your credit file, and if so, avoid using that service in favor of getting the copies yourself. Once you have your credit files, you should look over each one for obvious errors. Check for bills that you’ve paid off, and items that were reported incorrectly — these are two fairly common errors and if you have receipts or other proof they are very easy for a credit repair agency to remove on your behalf. Also be on the lookout for any negative items that are more than ten years old, anything you don’t recognize as a debt you owe, or anything that appears more than once. All of these types of potential errors should be investigated and more than likely you can successfully dispute this information. This will automatically start to move your credit score a little higher for each one successfully removed.

Step 2: Know Your Rights

As stated earlier, you’re entitled to a free copy of your credit report if a company takes adverse action against you, such as denying you credit. However, you can also get a free copy of your credit report if you are denied employment or insurance if you ask for your report within 60 days of getting notice of the event. This will let you find out what is on your record that they’re using as a basis to judge you as a bad credit risk. Any inaccurate items you find in this circumstance should be disputed as soon as possible. This is another right you have as a consumer. You can demand that the creditor validates the debt or that it be removed from your report. You can dispute payments that were made on time but reported late, accounts that are not yours, incorrect balances, creditors or account statuses – all are disputable, and if you know your information and have proof in the form of documentation (bank statements, bills with the correct information and date, etc.) then you should provide that information to the credit repair company as well so they can properly document your dispute. An important note to providing your records — always provide copies, never the originals. Items can and do get lost in the mail and you don’t want to lose your only proof that the debt is not yours. The Fair Debt Collection Practices Act (FDCPA) is a collection of laws designed to help protect consumers from unethical and predatory debt collection practices. It is enforced by the Federal Trade Commission (FTC), the consumer protection agency. The FDCPA is in place to stop debt collectors from harassing and using unfair and outright deceptive ways to collect on debt. Any professional credit repair company should be able to help you understand your rights under the FDCPA as well as other consumer credit laws.

Step 3: Seek Help

Some people try to go it alone for credit repair, while others turn to credit repair agencies for help. If you are having problems with trying to fix your credit, you can hire an agency for assistance. Stay away from credit repair company that charges large amounts of money up front, does not want you to contact the three national credit report agencies, or that makes promises that sound unrealistic. Never try to create a new credit identity to fix your credit — that’s fraud and you could face criminal charges as a result, even if you were taking the advice of a credit repair company. If you aren’t sure which credit repair company to use to fix your credit, we have reviews of companies like Lexington Law and Ovation with good reputations who offer free consult and often will give you free advice.

Step 4: Follow Up

If you want to fix your credit, you need to keep up with your disputes and how any other credit repair efforts are developing. A good rule of thumb is that if you haven’t heard anything or received any updates within 30-60 days, you should check up on the situation. When an investigation is completed, the credit bureau must send you results and a free copy of your report if there was any change brought about by your dispute. Keep up with this updated report — you may need it as proof if another debt collector tries to add the same inaccurate debts at a later time.

Step 5: Stay Informed

Once you have done all the hard work to fix your credit (with or without the help of a credit repair company), you can’t just kick back and assume it is going to be that way for good. Finances and credit scores are like a garden — if you want to reap the benefits, you have to keep it well tended and weed out anything that shouldn’t be there. Remember, you’re entitled to a free credit report every year. Since there are three companies that keep the information, if you stagger your reports throughout the year, you will be able to keep a careful eye on what your credit file contains. Bear in mind, however, that not all creditors report to all three bureaus, so if there is something amiss on one report, it may or may not be on the others, and vice versa. However, if you keep track of your credit this way, you will have a better idea of your overall credit health and you can fix your credit the moment you spot any problems.