The first thing that you need to understand about credit repair is that it is not something that can be done in a short amount of time.
A favorable credit score and apt credit history are a necessity in securing credit, loans, credit cards, mortgages, rentals, and many others. Credit report as well as credit score also plays a crucial role in determining whether you are capable of getting the right rates. In case you have mistakes, errors, or negative items that are pulling your score down, here are some guidelines on how to wipe off your credit history.
Get Your Credit Reports
The first process involves obtaining copies of your credit reports with the three credit reporting agencies; Equifax, Experian, and Trans Union. To obtain a free copy of each of your reports, you can do so once every financial year at annualcreditreport.com. Take some time going through each report you have and find out if there are any that contain wrong information, mistakes, old data, or accounts that you are not familiar with.
Dispute Incorrect Information
If there is any information on your reports that is not true that should cause a dispute process with the credit bureaux. For each error you find, write a dispute letter stating that the mistake was made and if there is any proof that shows this then attach it also. The second strategy is to explain why the information is incorrect and should be changed or deleted in a quite detailed manner. Address dispute letters to each bureau that include wrong information about you.
Common disputes include:
Posts that have nothing to do with you (other’s pictures or posts that might have been hacked, that is, identity theft).
- Incorrect account statuses
- It also widened the percentage view of correctly stated late payments.
- Mentioning wrong dates or reporting time frames
- Spelling of names and other relevant details which are wrongly written
- The accounts that were closed are still presented as open.
The credit bureaus have a legal mandate that demands them to look into the dispute claims in 30-45 days. Always retain all your dispute communications and try to follow up if the errors were not addressed within due time.
Reduce high balances on credit cards and limit the frequency of their use.
The second important factor, which affects the credit score and is related to the first factor, is the credit utilization rate – this is the ratio of outstanding balances to credit limits. Most specialists advise keeping your credit utilization below the 30 percent mark. It is easy to reduce the amount of money owed on accounts, which in turn has the potential of lowering the utilization rate of the credit limit.
Also, when you get other credit cards, you can request the lenders to increase the credit ceilings to try and increase your overall credit limit. Even if you are not likely to have balances with higher amounts, achieving higher limits means you will likely have higher utilization ratios.
Pay Off Collection Accounts
Delinquencies can be detrimental to credit, especially if they are current, before 2 years, or a past payment. Since accounts in collections do not disappear after payment, they will have the status of ‘paid collection.’ It is always good to pay off collection accounts as it diversifies your credit and shows that you pay your debts.
It is important to note that some collection agencies may be willing to engage in the so-called pay-for-delete if you can afford to pay the full amount owed to the creditor. If they agree to delete the collection tradeline after the payment then this can make your records clean. Before sending money to a collection account, ensure that you receive confirmation for the deletion agreement in writing.
Build New Positive Credit
Secondly, proper management of credit involves eliminating wrong entries on your credit report by seeking professional help or waiting for the credit reporting companies to remove them on their own but the most efficient method of adding positive elements to the credit mix is to open more responsible accounts which will put positive information against negative ones. Some good options include:
- Secured cards – basically, you have to deposit a certain amount of cash that will act like your credit limit, and repayment history is established by paying the bill on time each month.
- Credit builder loans – these are installment loans with carefully designed repayment terms and calculated to demonstrate creditworthiness.
- Revolving account history – retail credit cards where holders maintain high-standing store cards can provide
- An authorized user status – lets one enjoy the benefits of a well-initialized account yet does not force one to pay for the credit.
Therefore, one will be making on-time payments over time, keeping credit utilization low, and having credit accounts with different types in good standing serve to build credit history.
Look for Issues to Die Down in Reports
Certain negative credit issues only stay on your reports for a limited number of years:
- Late Payments – usually they can stay for 7 years
- Collection Accounts – usually it drops off after 7 years from the first delinquency.
- Write-offs – the accounts are generally erased after 7 years since they initially turned bad
- Bankruptcies – Chapter 13 bankruptcies can even have an open record for up to 7 years while Chapter 7 bankruptcies for up to 10 years.
- Foreclosures – typically takes 7 years from the initiation of the process
- Repossessions – Have a stay of 7 years from the time of repossession
If there are older credit mistakes and one does not wish to engage in learning how to dispute or trying to get them removed, in many instances, one can simply wait for them to drop off the credit report since they have reached their reporting time limit. While negative items can take some time to clear, your credit score should maintain a consistent upward trend.
This is a typical situation where one is forced to be patient when reconstructing credit.
The following are some credit reputation killers which include; Some of these issues such as bankruptcies or foreclosures may pull down scores for years. If you have a huge problem with your credit report, cleaning it up and reconstructing it will not happen within a short time, but with immense hard work and commitment. Be disciplined – this entails ensuring that one pays monthly bills, does not charge much on the cards, and avoids applying for credit during the repair period.
They may require following your credit reports and credit scores as a way to see how you are doing on your credit goals. Gradually, good behavior will replace the wrong ones to make a permanent change in the behavior standard. Also, take proper care of the comparison of the reports between the bureaus, as it helps in finding the difference in reporting time and scores. Do not lose touch with any disagreements that are not settled on the spot. However, it is possible to repair one’s credit profile and have it available for future necessities, provided that much effort is put into it.
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