From minor credit misunderstandings, such as a payment delayed in the mail, to major credit difficulties, such as being 60 days in arrears on an account, your credit difficulties seem to always find their way to the heart of your credit score. This can make your future financial transactions more difficult and expensive. Repairing those dings on your credit report before you need a new loan can help you avoid financial problems later.
Review Your Credit
Order your credit reports from the three primary agencies---Experian, TransUnion, and Equifax. You are entitled by law to a free copy of your reports once per year, and you can order them online, by phone or by mail. Not every creditor reports to all three agencies, so you need to view all three reports to get an accurate overview of your credit situation. Make a note of each negative item and any errors so you can address them one-by-one.
Correct Your Report
You can fill out the dispute forms that you receive with the credit reports to ask the agencies to fix the errors you find. Include copies of receipts and other supporting documentation. Agencies must investigate and resolve disputed items within 30 days of receiving your inquiry. Any disputed entries that the agencies cannot verify they must remove. If an agency corrects your credit report, it will send you a new copy, free of charge, containing the changes.
Close Unused Accounts
If you have too many open accounts on your credit reports, this could detract from your FICO score. Therefore, close those accounts that you do not use or really don't need. When ridding yourself of unneeded accounts, consider spacing the procedure out over several months to prevent a negative impact your FICO from closing out too much credit at once. Also, close out your newer accounts first rather than those with a credit history.
Repair the Flaws
The Federal Trade Commission (FTC) cautions consumers about advertisements for quick-fix credit repair, advising that you can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan" Accurate but negative entries on your credit reports will remain in place for up to 7 years, and bankruptcy information for up to 10 years. Prioritize your credit problems according to what you can fix the soonest. FTC recommends contacting current creditors immediately upon having a problem paying your installments to try to negotiate a workable payment plan. Next, address unpaid accounts on your credit report. Finally, re-establish your credit worthiness with any new accounts you open, budgeting your money to ensure you can pay on time, every time.
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