Credit repair is a business for some firms, but the Federal Trade Commission (FTC) explains that people can use the same tactics for self-help without paying exorbitant fees. A federal law called the Fair Credit Reporting Act (FCRA) sets forth rules for the credit bureaus that let you get rid of some harmful credit report entries, and the My FICO scoring education website spells out areas of concentration to repair your score.
Check Your Credit
You do not know the exact state of your credit until you review your reports with the TransUnion, Equifax and Experian credit bureaus. Lenders use these reports to assess you, and the FICO credit scoring firm and the bureaus themselves use it to determine your credit score numbers. The Federal Trade Commission website advises that the FCRA requires the bureaus to give you no-cost report copies once each year. They do this through an official website: annualcreditreport.com. You get charged for reports or must sign up for paid services like credit monitoring to get them free if you order them through the individual credit bureau websites, the FTC warns.
Fix Mistakes
Eight in 10 credit reports have mistakes involving dates and other data, according to Motley Fool money management website writer Dayana Yochim. Each error is a credit repair opportunity because the credit bureaus must erase disputed data if they do not confirm it with the appropriate creditor within 30 days of your complaint, according to FCRA provisions. Notify the bureaus of errors through the electronic forms on their websites. You will get responses in about 45 days, including updated reports showing that unconfirmed information is gone.
Keep Using Credit
Overuse of credit can get you into trouble, but you must charge things regularly to repair damaged credit records. Banks close accounts if you become seriously delinquent, which makes it hard to get new accounts for credit reestablishment. Bankrate financial site writer Pat Curry explains that you can put up a deposit to get a secured credit card. The bank then extends a credit line equivalent to your deposit. Your charges and payments are reported to TransUnion, Equifax and Experian, creating positive records if you handle the account well.
Pay On Time
Credit repair requires racking up a string of on-time payments on all your accounts, according to the My FICO site. Catch up any late credit card, loan or bill payments and send all future payments with plenty of time to spare so they do not get credited after the due date. Your bank may let you send funds electronically on a certain date to avoid mail delays.
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