Making Sense of Credit Repair

Credit repair is a process that can take months or years, depending on the state that your credit report is in when you start. The actual methods of credit repair vary greatly depending on the situation, with some people needing to pay down balances and others needing to remove accounts and inaccuracies from their credit report. If you understand credit repair, you usually don't need a third-party company to help you out.

Credit Score

Your credit score is a number generated using information on your credit report. Many different aspects of your credit report affect your score, from the length of your credit accounts to the balances on your credit cards. The credit score is used by lenders to determine generally whether you have credit worthiness to be considered for the lender's loan products.

Negative Accounts

Negative accounts cover collections, accounts with late payments, foreclosures, bankruptcies and other public records. These negative accounts bring down your credit score, and may prevent you from qualifying for specific loan products. Some credit companies do not give credit to borrowers with any negative marks on their credit. Public records can contain negative accounts such as bankruptcies and tax liens. Removing or resolving a public record is somewhat more complicated than a collection. Public records are often held at courts and other offices. Public records may fall off in seven to 10 years, depending on the type of record.

Collections

Collection accounts are credit accounts that have been assigned to a collection agency. Collection accounts can be handled in several different ways. You can arrange to pay the bill in exchange for the collection account being wiped off of your credit report. This is called a pay-for-delete arrangement. You may also contact the collection agency to settle the debt for a lesser amount.

Disputes

Errors are sometimes present on your credit report due to old, inaccurate or outdated information provided by the data suppliers. Each credit reporting agency allows you to dispute a particular piece of information on your credit report. When a dispute is sent in to the credit reporting agency, the agency checks the information with the original data supplier. The information is then updated or deleted depending on the supllier's response to the dispute. Disputes can be requested online, by phone or by mail with the credit reporting agencies.