Has life dealt you a poor hand recently causing you to be a bit slow to paying bills - or even missing several payments? If so, your credit score has likely been damaged and is in need of repair. In the worst of situations, you might even be faced with filing for bankruptcy.
It is important to start repairing your credit score as rapidly as possible since possessing a poor score can negatively impact your life in several ways. For instance, you may not be able to obtain a home or automobile loan and if you do secure financing the interest rate will be much higher than it would have been otherwise. A low credit score can also make it more difficult to rent an apartment or even gain employment. Many landlords run credit checks on potential tenants and certain job titles require a check with a good score a requirement for employment. In short, repairing your credit score sooner rather than later can help avoid many headaches and extra expense resulting from higher loan interest rates.
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Fortunately, credit repair is something that you can undertake yourself. However, you will need to be exacting and persistent if you are to be successful. First, commit to working on credit repair over the course of a year and perhaps longer if your credit score is severely damaged. Repairing your credit is not something that can be done in a few weeks or months.
The first step is to obtain a credit report from each of the three credit bureaus - Transunion, Experian and Equifax. These bureaus monitor and report consumer credit worthiness to potential lenders. You are entitled to one free report from each bureau annually per federal law. Additionally, you may obtain another report if a creditor takes an adverse action against you.
After obtaining the reports, closely review each of them looking for errors. Common errors are inaccurate personal information, incorrect Social Security number, wrong date of birth, or a prior address listed as your current address. Additionally, it is not uncommon for "closed" accounts to be listed as "open" with the associated debt still weighing down your credit score. Also, you might find that a mortgage or other loan is listed twice. Be vigilant when reviewing the reports since studies have shown that roughly 80% of credit reports have some kind of error or omission.
Should you find any errors, report them to the appropriate credit bureau. Do this by writing a brief letter stating the issue and by enclosing a copy of any supporting documentation. Do not send originals as you need them for your file. Upon receiving your letter, the bureau has thirty days to investigate the issue and reply back to you. If you have not heard from the bureau within thirty days, resend your letter and supporting documentation. If you are correct and an error is found, they are required to adhere to very particular procedures and fix the error.
The second step in the credit repair process is stopping any more damage from accumulating. If you are having trouble meeting your monthly obligations, telephone your creditors to negotiate repayment terms. Often creditors will work with you since they want to avoid having you default on the loan. Perhaps they will extend the amount of time you have to pay back the loan and concurrently lower the monthly payment. Maybe simply changing the due date would allow you to pay on time as the change would allow for improved cash flow.
Finally, close credit accounts that you no longer use and pay down your down credit card bills as quickly as possible. Do not let your total credit card debt start approaching the total amount of credit you have available. For instance, owing $5,000 in credit card debt with a $10,000 total credit line is much easier on your credit score than owing $5,000 with only a $6,000 credit line available. The key factor is how close you are to being "maxed out" and having zero credit available. Your best course of action, however, is to pay off your credit cards each month and not revolve debt month-to-month.
By following these steps, you can go a long way toward fixing your credit and avoiding the inconvenience and expense associated with a low credit score.
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