The Fair Credit Reporting Act was put in place to protect all consumers by allowing them free access to all three  of their credit reports every 12 months. This was developed so that consumers could view their reports for free and be able to dispute any inaccurate information that may be on them. [Read more...]

In some cases, bad credit is a result of irresponsible money management. But it often occurs because of unexpected financial hardship. One day you might have all of your bills current, and the next you could become disabled or lose your job. And if you fall behind on your debts, it will wreak havoc on your credit rating.

Credit repair agencies claim that they can clean up/remove bad entries from your credit report. But did you know that you can often have them removed yourself at a much lower cost? There are two methods by which you may be able to get negative entries removed from your report.

Option #1: File a Dispute with the Credit Bureaus

The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate any item on your credit report that you dispute. If the information is found to be false, inaccurate or unverifiable, it must be corrected or removed from your report. The bureaus have 30 days from the time they receive notice of the dispute to complete their investigation.

If there is any inaccurate information on your credit report, a dispute is certainly in order. But some people have had luck disputing items that were in fact accurate, including judgments, collections accounts and repossessions. If such items are not verified by the creditor (or the court in the case of judgments) within the time limit for investigation, they must be removed.

If you decide to dispute a legitimate entry, simply write a letter to each of the credit bureaus stating that you dispute that entry. No explanation is required. But keep in mind that if the entry is verified, it will remain on your report. And if the creditor verifies the information after the 30-day time limit, the credit bureau may reinstate the entry as long as they notify you at least 5 days before doing so.

Option #2: Negotiate with Creditors

Dealing with creditors can be intimidating, especially if you’re not on good terms with them. But speaking to your creditors directly may help you get negative information removed from your credit report.

If you only have a late payment or two on your account, a creditor might be willing to remove the derogatory information once you’ve resumed a regular payment schedule. If you’ve experienced repossession or had an account turned over to collections, payment in full might persuade them to remove the negative entry. It sounds like a long shot, but you never know until you ask. Requests to remove late payment information may be made after you’ve brought you account current. But if you’re hoping for removal of a repossession or collection action, it’s best to negotiate a deal before you pay anything.

If You Can’t Get the Bad Entries Removed

There is no guarantee that disputing information on your credit report or negotiating with creditors will get negative items removed from your record. If it doesn’t, the best thing you can do is try to build up some positive information on your report.

The first thing you need to do when trying to rebuild good credit is bring past due accounts current. Try to work out a deal with your creditors to accomplish this, or talk to a credit counseling agency. But don’t miss payments on current accounts to put money toward those that are past due. If it comes down to paying one or the other, keep the current account current.

Once you’ve brought all of your accounts current, put a priority on keeping them that way. Making your payments on schedule will raise your credit score, and with the passage of time, the good entries may outweigh the bad.

Many people are of the mistaken belief that by simply clearing their debts their credit score will be rated highly and they will have no problems getting credit.

Unfortunately this is not the situation particularly when they have had major problems with debt in the past.

Where there have been problems such as collections or bankruptcy this information can remain on your records for years and even if you have an excellent record of borrowing and repayment in recent times lenders will still see this information when they check your credit reports.

There is nothing you can do about this apart from accepting that it will take time for these issues to disappear.

What you need to do is concentrate on making sure that it never happens again and also to accept that it will be there until removed and you will need to work with it when dealing with any aspects of finance.

Even minor credit problems will remain a scar on your credit score but good financial management will overshadow this if you work consistently in the right direction and make sure you don’t make any mistakes along the way no matter how minor they might be.

It is still worthwhile paying off any of these debts because it will be recorded on your credit report that even though you were in default at the time of the loan you have made good since and that shows signs of financial responsibility.

Time will certainly reduce the impact that any major problems will have on your ability to get credit and the further you go from that time the more likely you are to get credit and to get better interest rates on that credit.

Even after you have restored much of your credit score it still pays to keep working at improving it as the better your score is the lower the interest that you will likely be paying and over the term of a loan even a small adjustment in interest can be quite substantial.

If you’ve ever applied for a loan or credit card, you’ve probably been subjected to a credit check. It’s the thing that lenders use to determine whether or not they are willing to do business with you. This is why many consumers cringe when they hear the words “credit report.” [Read more...]

Have you seen those commercials with the guy strumming the guitar and lamenting his credit situation? He’s not the only one who deals with that problem. Take your credit score in your own hands by reviewing your credit report on a yearly basis. [Read more...]