How to Repair a Bad Credit Rating

Your credit score acts as a rating that gives lenders a snapshot of your credit-worthiness. Leslie McFadden of the Bankrate financial site explains that it indicates your risk of defaulting on credit obligations within the next two years. The credit bureaus calculate scores, but McFadden cites FICO as the largest provider. Late payments and other negative credit report entries hurt your rating because FICO gets its information from those reports. You can repair your rating by cleaning them up.

Instructions

1

Request your Experian, Equifax and TransUnion credit files through annualcreditreport.com, the Federal Trade Commission or FTC recommends. The credit bureaus sell reports, but you are entitled to free copies once a year through the government mandated website.

2

Highlight every item that is hurting your credit rating. Every negative entry damages your credit score to some extent, whether it is a late payment, charged-off account, car repossession or home foreclosure. Court judgments and bankruptcies do serious harm.

3

Review the highlighted items for accuracy. The bad information itself does not have to be wrong. The entry simply has to contain some type of mistake. For example, the date of a late payment might be a few days off, or the name of the lender that repossessed your car might be misspelled. The FTC explains that you have a right to contest all inaccuracies.

4

Write letters to the three credit bureaus challenging every error on your reports. Ask them to investigate as they are required to do by the Fair Credit Reporting Act and to eliminate any items they cannot validate. Some of the creditors may not respond with corrected information, so those items are wiped from your reports.

5

Check the credit bureau responses you receive after your disputes have been processed. The FTC explains that they must tell you whether they were able to verify the challenged items. They must also send corrected credit report copies that reflect any changes. See how many entries were erased, as your credit rating gets better with each negative item you were able to eliminate.