A good credit rating is more important than ever. Many people want to know how to repair a bad credit history, and there is a lot of information and misinformation out there on the subject. In truth, credit repair isn't as difficult to comprehend as it is to implement. A great credit score is a valuable asset, and building it takes self-sacrifice and lifestyle changes to accomplish. This guide to credit repair will help you begin your journey to better credit.
No New Credit
Some companies may suggest that you can start fresh with a new credit report by applying for an employer identification number to use in place of your Social Security number. Acquiring an EIN under false pretenses is illegal. Be wary of any organization that claims to be able to do so. If it sounds too good to be true, it probably is. There is one way to possibly remove negative activity from your report. You can write a goodwill letter, in which you request removal of a negative item like a late payment, settlement or items that were paid off after a lengthy delinquency. The goodwill letter references recent good payments, responsible credit behavior or extenuating circumstances in order to bolster the request to remove the negative item on the credit report. This isn't new credit, it is just a way to extinguish the old.
Get a Free Report Each Year
When trying to improve your credit rating, the first step is to get a copy of a credit report from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. You are entitled to one free copy of your credit report each year from each agency. You can request all three at once or spread them out throughout the year. You may also get a free copy of your credit report when you have been denied credit, but you must request it within 60 days of receiving a notice of denial.
Dispute any Mistakes
When you receive your credit report, look it over carefully. Mistakes are common. You may dispute anything on your credit report that looks questionable by sending a letter to the credit reporting agency and requesting an investigation. The agency has 30 days to investigate the disputed item and respond. The agency must remove any item that cannot be verified. Be sure to submit your request in writing and document each step you take, including sending your request by registered mail.
Remove the Debt
Items reported on your credit report that are closed issues have less negative impact than ongoing problems. If possible, it is best to resolve any negative issues on your credit. A negative item that has been resolved will still appear on your report, but will not look as bad as if it were an open issue. Simply catching up on payments that are behind is one simple way to do this. Settling with creditors or setting up a payment plan counts as resolution of an open issue.
Have Patience
The final thing that improves credit is time. Stay out of trouble, and negative items on your credit report will eventually come off. Most items show up on your credit report for seven years, with the exception of bankruptcy, which remains for 10 years. Seven years is a long time, but as time passes, most creditors will take a more lenient view of past mistakes if there is evidence that your current credit habits are sound.
With time and effort, it is possible to do a great deal to improve your credit. It is important to be patient and realistic. Bad credit does take time and effort to repair, but by doing the right things, it can improve dramatically.
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