Whether your credit is less than perfect because of your own irresponsible behavior or because of circumstances beyond your control, such as unemployment, you can improve and rebuild your credit rating. Rebuilding your credit generally involves time and dedication to improving your finances, and there are some points to consider when you embark on a credit improvement plan.
How Can I Prevent and Fix Bad Credit?
In general, your credit score is determined by the information contained in your credit report. There are three major credit reporting agencies -- Experian, Equifax and Transunion -- and each bureau gathers information about your accounts, including when the account is opened, your balance and payment history. Every creditor has its own policies regarding when accounts are reported late or delinquent, but in general, any time you are more than 30 days late paying your bill, it is reported to the credit bureaus; after 90 days, the account is considered delinquent. Paying your bills on time every month, keeping your balances low and limiting the number of new accounts you open are the best ways to keep your credit ratings high.
Can Credit Counselors Help Me Rebuild My Credit?
If you are in over your head with your bills, a credit counseling firm may be able to help. A credit counseling company will help you negotiate with your creditors to lower interest rates and minimum payments to help pay off your balances. In most cases, you'll have to close your accounts to use credit counseling, and it may appear on your report that your accounts are handled by a debt management or credit counseling company. However, that notation is less damaging than not paying your bills. Do not use a credit counseling service that charges a fee; there are non-profit organizations that offer this service for free to eligible customers.
Can I Pay Someone to Rebuild My Credit?
Never pay anyone who claims he can fix your credit report for a fee. If the negative information on your report is correct, only time and repaying what you owe can remove it from your report. If the report is inaccurate, you can file a statement of up to 100 words explaining your side of the story that will be included in your report.
What If My Credit Report is Incorrect?
Incorrect information on your credit report could be causing damage to your score. All Americans are entitled to a free copy of their credit report every year, and when they are denied credit due to information in their report. Check your credit report regularly to make sure that the information is accurate and that all of your accounts, payments and balances are reported correctly. Dispute any incorrect information; removing incorrect negative information will improve your credit.
How Long Will It Take to Rebuild My Credit?
In general, correct information only stays on your credit report for seven years; bankruptcies are listed for 10 years. It is your responsibility to monitor your report and make sure that incorrect or old information is removed. If you are responsible with your finances in the meantime, your credit report can only improve in time.
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