Bad credit means you have many negative entries on your Equifax, TransUnion and Experian credit reports. These national credit bureaus list all your financial transactions, whether they are good or bad. Harmful entries include missing payments, defaulting on bills, having property repossessed, wage garnishments and court judgments for creditors. Too many negatives make it hard to get credit, but you can often fix your records for a minimal cost, according to the Federal Trade Commission (FTC), by using the dispute process set forth by the Fair Credit Reporting Act (FCRA).
1 Order copies of all three credit reports to find items to fix. The credit bureaus often give free copies if you sign up for paid services like identity theft protection, but the FTC explains that they have to give you a no-cost report with no other obligation each year if you use a special website (see Resources).
2 Read each credit report, searching for mistakes in every negative entry. The bureaus provide instructions on interpreting the information. Dates are commonly misreported, according to Dayana Yochim, a Motley Fool money management website writer, but you can use any error as a basis for fixing your credit. Compare the reports to your records to pinpoint wrongly reported lender names, credit limits and anything else you can find.
3 Compose letters to the credit bureaus, highlighting every mistake you found and stating that you dispute those items. Divorcenet, a legal advice website, explains that the FCRA makes the bureaus investigate everything on your list, as long as it does not appear to be frivolous, so make sure you detail the exact problem in each entry you are citing. You are not required to pay for their investigations.
4 Copy any paperwork that proves you have valid disputes for the items listed in your letter, the FTC dispute information website advises. You can scan it and print it out for free if you have a scanner. Otherwise, use a low-cost photocopy machine at a library or office supply store.
5 Mail your dispute letters, including attached documentation, through certified mail. This costs more than standard postage, but the FTC website advises that you get proof of delivery if you ask for a signed receipt. The bureaus have 30 days to process your disputes and the receipt tells you the start date of that period.
6 Review new credit report copies to make sure your bad credit is fixed in accordance with the bureau investigation outcomes. You are entitled to free copies after you make disputes. Equifax, TransUnion and Experian are legally obligated to erase disputed items if creditors do not confirm them. The Divorcenet site explains that the bureaus often do not get responses, so many negatives will be gone.
