If you are hoping to buy a house or car, trying to land a new job, or simply want a better rate on your credit card, you know that a bad credit score can seem like an overwhelming obstacle. Although fixing your credit is wise, watch out for scams. The Sacramento County Public Law Library's public services librarian warns that credit repair companies often use deceptive methods to target distressed consumers, costing them money without providing any real solutions. Fortunately, you can repair your credit yourself when you know what steps to take.
Obtain copies of your credit reports from all three bureaus, which are Equifax, Experian and TransUnion. Each report may be a little different. Examine each report meticulously to look for any discrepancies or errors. If you find any, the Federal Trade Commission reports that you should notify the credit bureau and the creditor in writing of the error. They will investigate your claim and make corrections if they confirm the error.
Explain special circumstances. According to the National Consumer League, you can write letters to the credit bureaus explaining late or delinquent payments due to health problems or involuntary job loss. They will add your statement to your file and provide the information to creditors whenever you apply for credit.
Add positive information to your credit report. Smaller creditors, such as local retailers and credit unions, may not report to the credit bureau. If you have credit accounts that are in good standing but are not on your reports, the FTC notes that you can add them. Contact the credit bureaus to request these additions, for which they may charge a fee.
Deal with your debt. Submit at least the minimum payment for all of your bills on time every month to prevent further blemishes on your credit rating. Funnel any extra money towards one debt until you pay it off and then focus on another one. Leave these accounts open after paying them off. Kiplinger's Personal Finance magazine states that closing accounts can actually harm your credit rating as it lowers your ratio of available credit, which is one factor the credit bureaus review when determining your score.
Wait it out. The FTC reports that negative credit information stays on your report for seven years and bankruptcies remain for 10 years. While you are taking action to improve your credit rating and maintain positive accounts, those damaging negative scores will disappear over time as well.
- The FTC reports that you are entitled to request one free credit report from each bureau under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act. These are available from annualcreditreport.com (see Resources).
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