Wednesday, May 12, 2010

Credit Repair Basics

Credit Repair Basics

Sometimes people need to repair their credit reports because they contain errors that can hurt their credit scores. Other times individuals need to repair their credit scores because of a poor payment history. Either way, there are steps you can take to repair both your credit score and credit report.

Write a Dispute Letter

    The Federal Trade Commission suggests sending a letter in writing to the consumer reporting company detailing what information on your credit report you think is inaccurate. Include copies of any documents you believe support your claims of inaccuracy. Make sure you provide your full name and address in the letter, along with a list of each item on your credit report you want to dispute. Ask the credit reporting company to remove or correct these items on your credit report. The FTC suggests printing out a copy of your credit report, circling the items you want to dispute and then sending the printed out copy of your credit report with your letter. It's also important to send your letter via certified mail with "return receipt requested" at the post office. This will help you document that the consumer credit reporting agency received your letter. It's also essential to keep copies of all letters you send to the credit reporting agency.

Fixing Accurate Credit Report Information

    Unfortunately the only way for negative information that's accurate to disappear from your credit report is with the passage of time. According to the FTC, consumer credit reporting agencies can list accurate negative information on your credit report for seven years.

Improving Your Credit Score

    If you need to repair your credit score and not your actual credit report, there are several steps you can take. The first is to pay off as many as your outstanding balances on your credit cards as you can, according to MyFICO.com. The second is to make sure you pay all of your bills on time. If you don't pay your bills on time your credit score will suffer. Setting up payment reminders is a one way to make sure you pay your bills on time. Paying your bills on time won't make your credit score improve overnight, but it will help in the long run.

Communicate with Your Creditors

    If you're behind on your credit card bills, it's extremely important to communicate with your creditors, according to Purdue University. If you don't communicate with your creditors, they might send your debts to a collection agency, which will hurt your credit score even more. Communicating with your creditors will decrease the chance that your bills get sent to a collection agency.

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