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Improving Your Credit Report

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If you find that you are credit-challenged-that is, you have bad credit-what do you do? Well, first and foremost, credit cannot be repaired quickly. Unless there have been errors in reporting (which can typically be corrected within 60-90 days by alerting your bank and the credit reporting agencies), you will have to give yourself the necessary time (months or years in some cases) to fix any issues in your credit history.

As a starting place, you will need to get a copy of your report to verify that all the information in it is accurate. The good news for consumers is that recent legislation entitles you to get one free credit report annually from each reporting agency. The free report does not include your credit score, but it will include any information reported about you by your creditors. It is best (most informative) to request separate detailed reports from each of the three major credit reporting agencies. However, a summary report is also available which will contain digested information from all three of the major credit bureaus.

The easiest way to get your credit score without paying for it directly is to ask what it is the next time you make a major purchase, or rent an apartment. Most retailers check your credit score routinely before they will negotiate price with you.

If you find incorrect information in your credit reports, notify the credit bureaus in writing with copies of any documentation you have that supports your claim. Keep copies of all correspondence and documentation. You should also contact the creditor associated with the mistaken information and ask them to notify the credit reporting company of the error. The credit bureau will inquire with the creditor who then has 30 days to respond. If the creditor cannot verify the information, it will be removed from your credit report. If you are able to get incorrect information removed from your credit report, you are entitled to receive a free copy of your report with the correct information. Additionally, you can ask that corrected copies of your report be sent to anyone that requested a copy in the previous 6 months.

If the creditor asserts that the information it reported is correct, you can request that the matter be investigated again. It is unlikely that this will yield the results you want, but you should still try it. Another option is to contact the creditor directly to talk about the dispute. If all else fails, you can have a "consumer statement" placed on your credit report. This is statement from you explaining that you feel part of your credit report is inaccurate.

What if the credit report is accurate but contains less-than-flattering information about you? As previously mentioned, there are no shortcuts to credit repair. Give yourself time - 6 months to a year or more - to improve your rating before you apply for credit. Address any delinquent (late, unpaid) accounts first. Get them current or make payment arrangements with your creditors so that you can get on the road to being current. If you have accounts that have been turned over to collections, make sure that you make payment arrangements with the most recent agency handling your debt. Your debt can be sold from one collections agency to another, and this can happen multiple times. So, it is important to verify what company currently holds your debt and make arrangements with them to pay it off. Additionally, be careful of paying off very old debts. If you make a payment on charged-off debt that is 7 years old or older (which has long since been written off and which is no longer on your record), you will create new activity on that account and restart the 7-year clock for that debt appearing on your record. That is, you can reactivate old debt and it can reappear on your credit report.

Additionally, if you know that you will be late making a payment to a creditor, contact your creditor in advance. The creditor may be able to waive late fees or make payment arrangements with you. Their goal, of course, is to ensure that you stay current with your expected payments. To that end, they are usually willing to assist you with any programs they have available to them.