Credit repair is meant to mend your credit score. You can do this yourself or engage the services of a credit repair agency. Credit repair is a three-step process. It involves analyzing the factors for a low FICO credit score, devising a plan to address the problems and finally building up your credit score and rating. When credit is repaired, you will be able to fetch loans at more competitive interest rates.
Credit Scores
Individuals with a FICO score of 720 or higher receive financial services such as home mortgages and vehicle loans at competitive rates. You can use credit repair firms to remedy bad scores. Credit repair firms analyze your financial position and then take measures to improve it.
Credit Report Details
Obtain your credit report or ask a credit repair agency to get it for you from each of the three national credit-reporting bureaus. Reports provide details on your place of residence, the manner in which you pay your bills and whether you've had any overdue payments or lawsuits against you in the past year. The reports also provide details on whether you have ever filed for bankruptcy or been arrested. Review each report and if you find discrepancies, write to the bureau and dispute them.
Remedy Your Bad Credit
Improve your credit. If you own credit cards you are not using, close them and pay off the balances. Even if the balances are low, interest and penalties will continue building up on them. Closing credit cards impacts credit score; therefore, it is advisable to close newest cards first. This way, the longer credit history with the older cards still remains. And if late mortgage payments are hurting your credit score, approach lenders and try to refinance your mortgage for lower monthly installments.
New Start
Continue to keep up with whatever is positive about your credit history. If you have promptly paid your auto loan, continue to do so. Once you've paid off past accounts and improved your credit score, apply for a new account and pay it on time.
Be Wary of Fraud
Carefully evaluate proposals from credit repair agencies. Many agencies run fraudulent schemes by asking the individual to take on a new identity; you can face serious legal action when you are caught.
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