Offers from credit repair companies to "clean up" your credit report are scams. No one can remove accurate negative information from your credit report. Tactics that these companies use are illegal. If you are considering hiring a credit repair company, save your money. You yourself can repair your credit report and rating legally at little or no cost.
Obtain Credit Report
The first step is to obtain your credit report from all three credit bureaus: Experian, TransUnion and Equifax (see Resources). Consumers can order one free credit report from each of these agencies in one calendar year. Obtaining all three reports will give you the full picture of your credit situation. Compare credit information on these reports. Some creditors report to only to one credit bureau. This will affect your credit rating because it is based on the information in the report.
Disputing Inaccurate Credit Information
Review and mark the information that you can dispute: accounts incorrectly reported past due or late, accounts not yours and open collections accounts you have already paid. Under the Fair Credit Reporting Act, credit bureaus and the company reporting the inaccurate information are responsible for correcting it. It will not cost anything to file a dispute, unless you send it by mail and purchase a stamp. When disputing by mail, include a copy of your report and clearly mark the incorrect information. Write a letter stating why you think the information is inaccurate. You can include copies of supporting documents. You may be able to dispute the accounts on the credit bureau's website. Credit reporting companies must investigate and respond within 30 days.
Accurate Negative Information
Only time can repair accurate negative information on your credit report. If you have open collection accounts, work with collecting companies to pay these accounts. Although closed collection accounts may remain on your report for several years, they appear as paid which is less damaging to your credit score. A judgment against you is reported for seven years or until the statute of limitations runs out, whichever is longer. Credit bureaus report bankruptcies for 10 years. There is no time limit on reporting criminal convictions.
Considerations
After correcting inaccurate information, focus on building good credit. Maxed-out credit cards negatively affect your credit score and may prevent you from getting additional credit. Pay the balances down and continue making payments on time until you pay them off. Pay all your bills on time to avoid collections. If you have problems making ends meet, contact a credit counselor to review your options. A reputable credit adviser will help you develop a budget and give you tips on money management and paying off debts.
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