Self-Help to Repair a Credit Report

Despite what the ads claim, there are no quick fixes for a credit score. Many companies offer services such as negotiating with creditors, budget help and credit repair. Many of these companies charge fees for these services. Indebted consumers are capable of performing these same services without the help of outside companies. You can save money and repair your credit with diligence and patience.

The Credit Report

The first step in repairing credit is to know your score. The credit score, or FICO score, is a compilation of scores from the three main credit agencies: TransUnion, Experian and Equifax. The three digit score ranges in value from 300 to 850. Higher scores translate into better credit worthiness. Consumers wishing to build their credit scores should first obtain a copy of their credit report. Every consumer is eligible to receive one free report a year from each of the credit agencies. There are also many online companies that provide credit reports for a nominal fee to those who wish to review the reports more frequently.

Reporting Errors

Consumers should review the report carefully for errors. Errors could hurt your overall score, so it is best to be thorough. If errors exist on the report, you should make a copy and highlight the error. Prepare a letter explaining the error and a request for removal. The credit agency has thirty days to respond to communications. If no response is received, then the errors should be deleted from the report. This is according to Section 611d of the Fair Credit Report Act. Bankruptcies stay on a credit report for 10 years from the filing date. If you find items after this time period, a letter should be sent to the credit bureau requesting an update. This same criteria applies to delinquencies, garnishments and repossessions, which have a time span of seven years to remain on a credit report.

Credit Repair

Time is the best ally for rebuilding credit, since payment history is a major component of the credit score. If you have late payments on your credit report, you must be diligent about paying on time in the future, so that the late payment will be overcome by the good history that you are building. If you are in a position to do so, pay down high debt because the amount of credit that you have available is also an important component. If you have many credit cards, and they are all maxed out, then the available credit will be low. Many consumers make the mistake of closing accounts in an effort to rebuild credit. This does not work because the debt is still there and now the available credit is reduced, so it has the opposite effect.

Maintaining Good Credit

After achieving a healthy score, it is important to keep up good credit habits. Be careful about applying for new credit too often, because credit applications create a credit "inquiry" that remains on your credit report for up to two years. Inquiries triggered by credit applications lower your score slightly, so it is best to only open credit accounts as needed. Pulling your own credit report has no effect on the score. It is also important to pay all bills on time, not just credit cards. Landlords, utility companies and insurance companies also report to the credit agencies, so any late payments will lower your score. Check your credit report regularly to ensure that information is being reported accurately.