7 Step Credit Repair Action Plan

Working to repair your credit isn’t the most exciting way to spend your time. It’s about as much fun as a visit to the dentist or the DMV. In some ways, it’s worse because you can’t get the unpleasantness over with all at once.

 

Yet even though fixing your credit isn’t fun, it is worth the effort. Improving your credit can save you money and reduce your stress in many ways.

 

Whether your credit problems happened because of bad luck or bad choices, it’s possible to repair your credit over time. These seven steps will guide you through the process.

 

Step One: Check all three of your credit reports.

 

Before you can make an effective plan to improve your credit, you need to know where you’re starting. You should check your three credit reports from Equifax, TransUnion, and Experian.

 

Visit AnnualCreditReport.com once every 12 months to claim your three free credit reports. You may be able to access more free reports if you’re turned down (or offered less attractive terms) for credit, insurance, or a job. But act fast. You must contact the credit bureau within 60 days of the “adverse action” to request these additional free reports.

 

Have you already used up your credit report freebies? You can still access your credit in other ways. There are many websites that offer free reports online or you can pay to purchase a copy of your credit report sand scores.

 

Step Two: Make a list of every error, mistake, or questionable item you find.

 

Now that you have your credit reports, it’s time to pull out your magnifying glass and examine them. Write down every potential problem you find.

 

·     Are there accounts you don’t recognize?

·     Did someone pull your credit report (and cause a hard inquiry) without permission?

·     Are the three bureaus reporting mismatched information about your accounts?

·     Do any late payments, balances, or dates on your reports look wrong?

 

The FairCredit Reporting Act (FCRA) lets you question the credit bureaus about any information that seems off.

Step Three: Write a 609 letter.

 

Once you have a list of information you want the credit bureaus to investigate, you’re ready to send a dispute. Although you can dispute credit report items online or via phone, the FederalTrade Commission recommends mailing a certified dispute letter with return receipt requested.

 

Credit dispute letters come in many shapes and sizes, and you can write yours however you please. One popular credit repair dispute strategy is known as the 609 Credit Repair Letter.

 

Section 609 of the FCRA gives you the right to request information, including everything in your credit file and the sources of that data. You can also ask for unverifiable information to be removed from your credit report. So, if you dispute an account and the creditor can’t (or doesn’t) verify that it’s accurate when the credit bureau investigates, it must be deleted.

 

Step Four: Write a goodwill letter.

 

The credit bureaus aren’t the only companies you can reach out to when you want to change something on your credit report. You can also reach out to your creditors directly to dispute credit errors or ask for a favor. One way to ask for a favor is to send a good will letter.

 

A goodwill letter asks your creditor to change negative information it’s reporting to the credit bureaus about you — like a late payment. If the creditor agrees to help you out, your credit score might improve once the negative information comes off your credit report.

 

Step Five: Check your results.

 

Sending a 609 letter to a credit bureau or a goodwill letter to a creditor doesn’t guarantee that your credit problems will vanish. A credit bureau’s investigation may determine that the information you disputed is accurate. A creditor might turn down your goodwill request or ignore it all together.

 

When you send a dispute, the credit bureau must complete their investigation within 30 days (sometimes 45) and let you know the results.You should also check your three credit reports again at this point (and around30-45 days after sending a goodwill request to a creditor).

 

Step Six: Follow up and escalate.  

 

If your dispute is unsuccessful and your reports still show mistakes or suspicious information, you have more work ahead of you. Here are afew options you may want to consider.

1.    Send follow up dispute letters to the credit bureaus (preferably with proof to help support your claim).

2.    Make a complaint to the Consumer Financial Protection Bureau (CFPB).

3.    Talk to an attorney who specializes in FCRA rights.

 

You can’t force a creditor or credit bureau to remove accurate, negative information from your credit report before the FCRA requires. But you may be able to appeal to a different department or supervisor and ask them to reconsider your request for a goodwill adjustment.

 

Step Seven: Establish positive accounts.

 

Working on the current, positive side of your credit can be helpful when you’re trying to repair your credit. If you don’t have any current accounts, you may want to consider opening a few new ones.

 

Even with bad credit, you may be able to qualify for one of the following:

 

·     Secured or Subprime Credit Card

·     Credit Builder Loan

 

When you do establish new accounts, it’s critical to manage them the right way. Make every payment on time and keep low balance to limit ratios on your credit cards. (Ideally, you should pay your full credit card balance each month.)

 

New, positive accounts won’t erase the damage of bad credit history. But they can be an important piece of the puzzle to help you rebuild better credit in the future.

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