A customer’s credit score is of utmost significance because it is used to gauge one’s financial wellbeing. A good score is derived from a favorable report, and it determines the individual’s ability to access funding and favorable credit terms. In this article, we will cover all things you need to know about credit repair.
What is credit repair?
Credit repair is a corrective process when things go awry and a consumer’s credit report contains substantive errors, fraudulent entries, or when the resultant score requires restoration. As a cleanup process, credit repair is entirely dependent on the existence of factual inconsistencies. Beyond the report, however, practical steps must be undertaken to prop up the credit score.
7 things you need to know about Credit Repair
It is your right. Every individual is entitled to a fair and accurate credit report from the credit reference bureaus. It is upon this fact that credit repair is legally premised. It is, however, essential to remember that you cannot raise a dispute that is nonexistent or untrue. Fundamentally, credit repair must not be viewed as a mechanism to attempt to boost one’s credit score when the rationale is absent. Any attempt to present frivolous disputes to increase one’s credit score is an exercise in futility. You can access your free credit scores here.
Understand what is disputable. It is imperative to request all the reports from the three major credit bureaus; Experian, TransUnion, and Equifax. By comparing and contrasting generated information items, you can detect the irregularities upon which a dispute will be based. Specifically, take note of faulty items, obsolete entries, false claims, and unsubstantiated expenses. A meticulous eye for details is required to capture errors that ultimately affect the credit rating. These include misreported amounts, items whose time has expired, amounts resulting from identity theft, and completely unrelated items to the card bearer.
Lodge a supported claim. After a thorough inspection of the credit reports, the next important step is seeking a cleanup if inaccuracies are established. The complexity of the errors determines the intensity of this process. Every submission has to be accompanied by supporting and evidentiary documents such as bank statements and receipts. It is worth noting that each dispute is addressed to its corresponding credit reference bureau. Procedurally, the credit bureau should give feedback within 30 days and furnish the customer and other relevant parties and authorities with a new report if altered. You can get our free credit dispute letters here.
Negative information won’t just disappear. Credit repair will not erase or undo the undesirable facts accurately captured in your credit report. You will have to contend with ugly realities in the statement as long as they are accurate and their active periods have not expired. These negative issues include late payment and recorded bankruptcies.
Fixing the credit score requires time and discipline. The above credit repair steps will fix the credit report but not the score. The credit score requires deliberate corrective efforts from the concerned individual. The curative measure to be undertaken must begin with the consistent and regular payment of all accrued monthly bills. This is crucial in reconstructing a positive repayment history. The other critical remedial step is to cut down the credit card’s use to lessen the repayment burden. Once you have reduced credit card utilization, you must commit to paying off all outstanding card balances and make sure you do not exceed the limit allowed by the issuer. In the meantime, every temptation to take new credit must be shunned with a resolute mind.
Related: Who Are The Best Credit Repair Companies?
Monitor your card utilization and your credit repair progress. A full recovery of the credit status will take time and discipline. Every gradual step must be monitored and mapped throughout to avoid a relapse. The periods of credit repair also depend on the gravity of the matter at hand. While missed payments can be repaired in two years, it may take three to seven years to undo the problem of defaulted payments. The bankruptcy, on the other hand, requires seven to ten years to repair fully. Credit repair is indeed a long process that requires dedication, fortitude, and forthrightness. There is no shortcut, not even the deceptive belief that you can escape a bad credit history by closing the concerned account.
Change your habits. When one gets to the top of things, the greatest challenge is to remain at the top. The frequency with which many people slip in and out of this crisis creates a vicious cycle of debt and is financially unhealthy. One must avoid the pitfalls by all means necessary. Do not borrow what you cannot afford to repay. Do not live beyond your means and pay your bills on time.
Why do I need to fix my credit?
Fix your credit! From the misty mornings of winter, through miles of springtime and fall, into the warm sunsets of jolly summer, one thing is exact and indisputable; the world smiles and opens its magic bag of conveniences and favors; when your finances are right! Think of a dinner in the fancy skyscrapers of New York, an exhilarating stay in glitzy Las Vegas, a family holiday in the Bahamas down south, or the faraway Maldives. Your mind is calm when you have no qualm with your credit status! The American dream is right in front of your eyes. Here are key reasons why you need to fix your credit without hesitation.
- Credit status defines your financial stability. There is enormous comfort when your assets and investments are secure and not subject to the volatility and tempestuous shocks of the market or the whims of creditors or financiers. Once you have shaken off bad credit – whether in business or personal affairs – you can safely advance with pride and confidence by venturing into new territories. Fixing your credit thus frees you to rise swiftly. All the grand plans for a new home, posher car, swankier furniture, dream trip, and life in a leafy suburb require this stability. Fix that credit and unchain your spirit.
- A loan’s burden is in the interest rate. On the other hand, one’s credit score directly determines the interest rate attached by most lenders. Good credit attracts the lowest interest rates available in the competitive market. Another benefit accrued from this is the acquisition of friendly rates for credit cards. While the card rates can fluctuate from time to time, when your credit score is excellent, you always stand a chance of personally negotiating for a reasonably lower amount and save money on unnecessary and wasteful high interest rates.
Related: How Can I get a Loan With Bad Credit
In many cases, bad credit is what is holding you from accessing favorable and lower insurance rates. Current insurers have adopted an insurance score which is calculated from the credit rating of a client. Being in the red in this case means you miss out on these profitable options.
- With a good credit score, it is unnecessary to pay security deposits to access home services and other related utilities such as electricity, phone, and internet. Most of these companies levy exorbitant deposit charges to forestall any losses if the client defaults. Fixing your credit saves you the trouble of proving your trustworthiness by paying for this security upfront.
Perhaps nothing can be as frustrating as failing to get a job or clinch that highly desired promotion at work because of bad credit. Indeed, employers in some government departments and many financial management institutions use credit history to gauge one’s suitability for employment.
Beyond one’s career, it is also evident from current trends that a low credit score will leave you in the cold, penniless, and worst of all, homeless! Check this, unless your financial history is clean and sound, property agents won’t sell you a house because no bank is likely to lend you an affordable mortgage. Simultaneously, you will be unable to rent an apartment as landlords view you bear a ‘credit risk’ tag. It gets grimmer in situations where paying in cash is completely discouraged, or it could attract a heavier deposit.
- A clean credit record guarantees beneficial financial solutions. Credit card issuers often increase the credit limit for that client that has cleaned up. However, a bad credit record can throw one into the mouths of financial sharks. The inability to regularly get funding from mainstream institutions leaves one at the mercy of backstreet shylocks who levy exorbitant fees and user-unfriendly lending terms. These ‘sharks’ prey on people’s desperation and their quick-fix solutions can leave one in a tremendous mess.
- Good credit means financial independence too. It unchains you from the shackles of debt and frees you from the woes of seeking guarantors or co-signers when applying for a loan. On the other hand, bad credit can make you a nuisance and a bother to friends and family members who have to step in to fill the risk gap.
- When good credit has brought forth all the preceding advantages, it goes without saying that one’s overall wellbeing is a natural consequence. There’s greater joy in going through life without the baggage of debt. One avoids the mental anguish, the constant annoyance, and harassment from debt collectors. It also spares you from that dreadful phone call or mail to announce the cancelation of your credit card.
How can I fix my credit myself?
Bad credit can turn your life’s journey into a nightmare. The nuisance of high-interest rates is horrid, and the anguish of denied services is a heart-wrenching reality. However, the bottom line is that fiscal discipline is a personal choice, and ultimately, you are the captain of this ship. Whereas you can seek help from professional credit repair companies to amend inaccuracies that emerge in a credit report, the undeniable fact remains that these companies cannot amend the ‘original sin’ of accumulating avoidable blunders.
Bad credit is an organic mess that is fed by one’s unfettered appetite for debt. It follows then that it is the original author of the problem who can conclusively work towards a lasting solution. It begins and ends with the credit card owner. Here are concise and simple steps on how you can fix bad credit yourself.
- Develop a credit philosophy
Long before your credit went bad, you had a clean slate of spending. Revise your steps and establish the point of departure. Here is the point at which control of your finances went haywire. Review the exact details of your expenditure, borrowing, and repayment. Once these details are in the picture, weigh them against your lifestyle, and you will unearth the monster that drove the credit into the ugly corner. From this realization, develop personal rules and draw lines that cannot be crossed. Let this be the guiding principle on the place and extent of credit in your life. Finally, amend your habits to suit the set principles. Voila! You have a credit philosophy.
- Understand the status quo. Request your Credit Report
When you find yourself in a pit, stop and let the fact sink. Do not dig deeper. Figure out the depth and the magnitude of your current predicament. Equally, when you are in a bad credit situation, map out your current position as it is. That is the status quo. The first action in understanding your credit heartbeat is to request a Credit Report from all the three main credit reporting companies. This report is a legal entitlement, and you can access it at absolutely zero cost. The three companies Equifax, Experian, and TransUnion, can issue the report through an online request. You can visit annualcreditreport.com for more information.
- Document your credit history
Inspecting a credit report is a daunting task because it requires memory of transactions buried in the past sands. This is exactly where credible and well-preserved records and documents become valuable. Records hold evidential value, and in moments like this, they serve as a tool to explaining discrepancies, inaccuracies, and errors that have pushed your credit to this painful zone. These documents will also be the cornerstone of any dispute and claim you make to repair your credit. They include receipts, loan agreements, repayment plans, overdrafts, and every record about your current account.
- Raise the Red Flag; Dispute
Study and comb through your credit report. It would be best if you had a meticulous eye for every detail. It would help if you had the skill to mark out even the tiniest error with absolute exactitude. This is vital because occasionally, a small mark such as a comma can completely alter the meaning of a sum of money indicated. To have a complete picture, ensure you compare and contrast each company’s report for consistency. If an issue suspected is detected, the reporting company must issue a detailed statement of results and consequently issue a cleaned-up credit report. The company will immediately alter and fix the error in your files currently held, and such a matter will not arise as a dispute.
- Time heals
Whereas a disputed inaccuracy can be adjusted through the above dispute mechanism, some negative information is held in the report, but the credit report cannot. Only time can make such information fade away from your current report. A good example is a piece of information on an unpaid judgment that stays on for seven years from the day the event happened.
- Mend your ways
Back to where this began. As we advance, revert to your credit philosophy alluded at the beginning. Do not make a bad situation even worse. Incremental efforts will improve your credit record and ultimately boost your credit score to satisfactory heights. Begin with the old English wisdom “cut your coat according to your cloth.” Prepare and adhere to a living budget that doesn’t overstretch your income. Your total monthly expenses (utilities, mortgage, rent, food, car, insurance) must fit neatly into your monthly income after tax. Within that budget, make a provision to offset all credit card balances, and at that point, do not request new credit. In the meantime, rebuild your credit profile by paying your bills and other repayments dutifully and on the scheduled time
You are the captain of your financial vessel. Bad credit comes like a storm at sea. The safety of your vessel is a personal responsibility that you must embrace with utmost dedication. You can DO IT YOURSELF by steering it away from the storm, following a clear path and towards a calm harbor with skill and discipline.
Related: How Can I Fix My Credit By Myself?
Ultimately, fixing your credit reflects fiscal discipline and is also a mark of dependability and utmost trust in an individual’s financial dealings. It improves relationships with financial institutions and other credit providers. It boosts savings by reducing wastage and unlocks the potential for investment and acquisition of property or services. If you had one thing to do today, fix your credit.
Do you have bad credit, no credit or want to learn how to become a credit expert?
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- What your actual credit score is
- How to get a copy of your free credit report
- How to get your credit back on track today
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