How To Repair Credit
While it may seem impossible to dig yourself out of a bad-credit hole while you are in it, there is an endless amount of success stories that can give you confidence to reverse your poor credit showing. Maintain to yourself that it is a gradual process; your credit score won’t increase greatly overnight but with patience and perseverance, you can ensure your creditworthiness.
Look over your yearly credit report. While there is a lot of information presented in these reports (which can be spread over multiple pages). No matter where you receive the report from, there will be the following pieces of information on it: your personal ID info, the history of each account you hold, information pertaining to anything listed in public record (ie. a bankruptcy) and all the inquiries for your credit report.
Note which items on the report need to be repaired. It is possible for incorrect information to appear on your report; for example, accounts that don’t belong to you or payments that have a late payment date. Also make note of accounts that are past due, and any accounts that are over your credit limit.
These disputes can be sent online, by phone, or by mail. Mail is the recommended method, as you can have a record that clearly documents your dispute. The credit bureau you send it to has about 30 – 45 days to look into your report and respond. Alternatively, reports can be taken to the bank. They will take a look at your credit report and remove any inaccuracies, incomplete information, or unverifiable items.
The payments you have made are the biggest influence on credit score, contributing approximately 35% to your score. This means that having late payments or overdue pending payments will greatly affect your credit score. It is therefore critical to ensure these payments are paid and up-to-date. A payment can also have the status “charge-off”, which means they are over 180 days late. It is important for you to make payments before they reach charge-off, and if you can’t, contact your creditor. There is a chance they’ll waive some of the late fees that apply, or spread out the total due over several payments to make it easier for you. Sometimes the creditor will accept a settlement and cancel the remaining amount of the debt. In any case, charge-offs will get sent to a collection agency and you do not want that.
You will have to prioritize where you spend the money that you set aside each month for debt payment. Priority one is accounts that are close to being past due. Pay off as many as you can, or all if possible. Secondly, work on decreasing your credit card balances. And lastly, give attention to charge-off accounts, especially if they have been sent to a collection agency.
When you have looked at your report and taken care of your existing accounts, you should start a fresh account with a major credit card, and ensure you meet all credit obligations promptly. Retail credit cards can even be slightly easier to obtain if your bad credit is making it difficult to get a major credit card.
