How to Repair My Credit – Three Key Steps to Repair Your Score
You are not alone, there are many individuals with a damaged credit history. In fact the average credit score is considered fair or low credit. However there are steps you can take to drastically increase your score.
1. Show Available Credit – This is your available credit to debt ratio. This piece of information accounts for about 30% of your overall score. It will help if you can show that you have available credit that you are not using.
In other words by having money that is available to you to borrow but you are not borrowing it will help you. For example, if you have a credit card with a limit of $1,000 if you can keep your balance around $300 your score will get the biggest bump.
This is because you have $700 of available credit. Regardless of how much debt you may have (student loans, mortgage, and car loan) by showing you have funds your not borrowing; it will appear that you are a good risk. You are showing the bureaus you are in a secure financial position, otherwise your card would be maxed out and you would not have any available credit.
2. Settle Delinquent Debts – If you are getting harassing phone calls and communications from debt collectors it can help to settle these accounts. The reason it can and not will help is because you must navigate a settlement agreement. If you go out and just start paying old debts, your score will not improve. The items will remain on your report.
Instead you need to negotiate with the debt collectors to get them to agree that in exchange for your settlement payment the collector will stop reporting your account to the bureaus. Additionally make sure you do not settle for the full balance of your account, the collector bought your account for just pennies on the dollar.
3. Dispute Negative Items – With the example above if you get the debt collector to agree to stop reporting your mark once you dispute it, the bureau will remove it from your report. When you file a dispute you are saying to the bureaus that the item is inaccurate and they either need to update it to make it accurate or remove it from your file.
The Fair Credit Reporting Act a piece of legislation was passed by Congress in 1970 and this law is what gives you this right and it is what forces the bureaus to investigate and remove inaccurate items from your report. This law was passed for good reason as it is estimated one in every four reports carries an error on it. Is this error negatively influencing your score?
To file a dispute you must write a letter in which you indicate the item you want investigated, the reason it is inaccurate, and any supporting evidence you have. Once the bureau deems your dispute valid they will investigate and contact the lender and ask them to verify the account and the corresponding details (dates and the balance).
Unfortunately the bureaus are spending potential profits when they investigate consumer disputes. Thus, they do everything legal and occasionally in the gray area of legality to avoid investigating items. I say the gray area because the bureaus have been fined over and over again by the FTC for not complying with Federal Laws. If you run into frustrations trying to get your dispute investigated we suggest a professional credit lawyer to ensure you dispute is investigated.
For a free credit consultation call 1-800-768-3386 or to learn more about how you can repair my credit rating or for information about how credit repair services work and what they can do to help fix your credit visit us.