Credit is one of those things in every adult’s life that very few can actually run away from. It is tied to your identity and influences many of your most critical financial decisions. Without good credit, it would be difficult to buy a home, get a new car or apply for a credit card. In some cases, a bad credit history can even affect an individual’s chances of getting a job. Although there are third parties offering assistance to fix credit, it is possible to do a DIY (do it yourself) credit repair using these steps:
Know Your Credit
The best way to determine the state of anyone’s credit is through a credit report. In the U.S., credit reports are filed through 3 major credit bureaus – Equifax, Experian and TransUnion. All creditors report to at least one of these bureaus, so reports from all three are likely to have a discrepancy. Anyone is entitled to a free gov credit report from each bureau every year, which could be accessed through AnnualCreditReport.com.
Make Every Entry Count
Every consumer should remember that credit bureaus only generate credit reports with information provided by creditors. It is not the job of the bureaus to verify. As such, any mistake or error in the reporting is not their responsibility to correct. That would be the job of the consumer.
Once the reports have been received, examine the entries for any possible errors, including misspellings, typos, incomplete, inaccurate and outdated information. Any mistake must be formally disputed in order to correct the report and improve the credit score.
Dispute Errors
Whatever errors are found on the report must be disputed in writing. This can be done two ways: writing a letter to the credit bureau or using the dispute form that comes with the report. It is important that for every item disputed, the error should be clearly identified and the reason for the dispute stated. A copy of supporting documents should also be provided. Followup with the credit bureau in question may be necessary until the error has been corrected.
In some cases, an error may be corrected by getting in touch with the creditors and informing them of the problem. Any document they provide will help in rectifying the error. The credit bureau in question will then review the dispute, modify your report and send an updated copy at no cost.
Improve Your Finances
Any negative entry in the report that is true cannot be undone, so it is important to ignore offers and advertisements that say otherwise. Only time and regular repayment of debts will improve that. The only genuine way to repair credit is by taking charge of your finances – paying bills on time, minimizing unnecessary spending and increasing the amount of your savings. Creditors very often consider the payment pattern of consumers over a few incidents of failure to pay back debt. When payments are regular over some period of time, your credit rating improves.
Don’t Run Away From Creditors – Be Proactive
Possibly one of the most important advice here. Do NOT wait to default on a payment before talking to creditors. If payments will be late, immediately get in touch with the lender and negotiate a term before the due date if possible. For Example: If you can’t make the credit card payments before the due date, then call your credit card issuer right before (or maybe exactly on) the payment due date. Tell them you’re in a bind. (Yes, the tendency is to avoid making such a call because we might feel ashamed that we couldn’t make the payment. But avoiding the problem will definitely make things worse). Usually your creditors will be lenient towards you and give you a one month extension. They also won’t report you as delinquent or late to the credit bureaus. They will work with you and extend the due dates or reduce your monthly payments. You in turn get to keep your credit rating in good shape. A win-win situation. But if you avoid calling them and decide to hide, that’s when your creditors start to panic. Report you as delinquent. They want to know they can get in touch with their borrowers. So don’t be wary, feel embarrassed, ashamed, or too proud, in taking the initiative to work things out with your creditors.
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