Credit Repair

We’ve already discussed the basics of credit scores, how credit scores are created, and how to safeguard your credit score. But what if your credit score has taken a hit? What steps can you take to improve your score? In this blog, I would like to give you some tips on how to repair your credit score and what to do if you find inaccuracies in your report.

The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan. Here are several tips on how to curb spending and avoid falling into the credit trap:

1. Consider wants vs. needs – having a budget helps you know what you can afford and minimizes impulse buying
2. Pay your bills on time and if possible pay more than the minimum payment
3. Apply for and open new accounts only when absolutely necessary – each new application for credit affects your credit report
4. Avoid finance company and department store cards – they usually have higher interest rates
5. Open a savings account – it’s much better to save for major purchases or those unexpected bills than to use credit – pay yourself first, even if it’s a small amount, over time it adds up (your credit union allows you to set up multiple savings accounts under your main membership which allows you to set up a Christmas account or a vacation account and so on)
6. Take care of bills or disputes in a timely manner – investigate disputes and have them removed if the information is incorrect

If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. Just be careful and remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. One trusted service that we recommend often is Consumer Credit Counseling. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. They will discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems.

If you find yourself in the unfortunate position of having to consider filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. Consumer Credit Counseling is a government-approved organizations listed on www.usdoj.gov/ust, the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors often set their own standards, and not all creditors look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if they see your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

So, what can you do if you find discrepancies on your report? No one can legally remove accurate and timely negative information from a credit report but the law does allow you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

• You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
• Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com.
• It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the Fair Credit Reporting Act (FCRA), both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.

Just some good news to end with, as recently as this week, Equifax reported that the average credit score surged to 704 in July, a level it hasn’t been at since 1998. This is proof that consumers are actively reducing debt, increasing savings and repairing credit. I trust this information has given you hope that you too can improve your credit and become financially healthy!