Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

6 Steps to Repair Your Credit

Written by Erik Larson, Community Blogger | Dec 22, 2017 1:26 PM

Bad credit makes things difficult. While it is possible to live with a less than favorable credit score, it is almost impossible to get decent rates when buying a car, getting insurance, or the apartment you want. Also, when your FICO is low, it may stop you from getting a good job too. The number of companies that check your credit is only going to increase rather than decrease. If your score is below 600, then you need to pursue credit repair. 

Credit repair can save you a ton of money. It will open the door for new opportunities and give you the security you need. There are all sorts of companies that offer this service, but you can do it on your own. Here are six steps to cleaning your credit. Be warned; it is a significant task. 

1. Obtain Copies Of Your Credit Reports

There are three major credit bureaus that creditors report to are Experian, TransUnion, and Equifax. Each of these companies is required to give you a copy of your credit report for free each year. You can obtain this report by contacting them directly or going to www.annualcreditreport.com. You may also receive a credit report if you have been denied for credit. Gathering all your reports is the first step to raising your score. Don't be alarmed; these statements are often quite large. However, it is worth the effort to go through them. 

2. Check For Errors

Chances are that your credit reports are all different. You may see a score difference of 40 points or more between the bureaus. Some companies report to one agency and not another, and this can have a drastic impact on your overall score. While your FICO is essential, in this phase, you are more concerned about the errors. Go through any public records and collections and see what is incorrect. If you have numerous collections on your report, it is possible that some of them are duplicated. 

Duplicate collections accounts happen when an account is sold from one agency to another. The principal creditor may report the debt as well as the collection agent. In all actuality, it should be reported just once. The original lender should show it as closed or charged off. Different collection agents may also report that same bill more than once too. Go through the report and look for anything that is not right. 

3. Lodge A Dispute

Experian, TransUnion, and Equifax all have dispute forms that you can file. When you see something that is not right on your credit report, you should file a dispute. This will alert them that they need to investigate. They will send a copy of your argument to the company that made the mark on your credit. The company has 30 days to respond to their request. 

In many cases, the companies do not respond because the account has been sold or they have poor case management. If the company does not make contact about this report, then the agency will remove the mark. If they do contact them, they will need to show proof that this debt is valid. Either way, there is a good chance that this ding on your report will be removed. 

4. Try to Negotiate or Settle

You can contact your creditors and make a deal with them to settle these accounts. If the account is really old, chances are they are willing to settle for pennies on the dollar. It never hurts to ask. Have them re-age the account on your credit or remove the dings as it will help your score. 

5. Begin Paying Small Bills

Once you have fixed all the errors, it is time to tackle those past due accounts. When speaking of credit cards, pick one account and get those high balances below the credit limit. Did you know that your credit cards should lonely be at 20 percent of their balance? If your card has a limit of $500 and you have charged $400 for it, then you are hurting your credit score. Start paying off bills one at a time. 

6. Know When To Get Help

If you are in over your head, then you may need help. There are repair agencies that can help you with your credit. Checking the many credit repair reviews, you can find a company that can get the job done. It is a massive task to file all these complaints and go through the reports. Perhaps, having a company do it for you will be easier. 

Dealing with credit problems is not fun. Bad credit can happen to anyone. Thankfully, you can repair the damage and rebuild. Regardless of effort or cost, you will be so glad when you bring your score into a good to excellent range.

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