Bad credit can leave you with few or no options for getting a credit card, mortgage, a loan, a good job, or even a decent apartment. Before succumbing to the promise of "quick credit repair" services, check out the laws and rules that let you repair your own credit at little or no cost.
Request Your Credit Reports
You have the right to request a copy of your credit report from all three major credit bureaus. While they can charge for this service, federal law requires them to provide you with one free report each year. Visit annualcreditreport.com to request your free reports.
You are also entitled to a free credit report under a few other circumstances: If a potential creditor, landlord, or employer takes an "adverse action" against you (such as denying you credit, requiring a co-signer, or withdrawing an offer of employment), it must give you the name of the credit bureau that provided the credit report. You can then request a free copy of the report from that bureau within 60 days of the adverse action. If you are unemployed and planning to look for a job, or on welfare, you can also request an additional free credit report.
Dispute Information
After you get your reports, look them over carefully. Keep an eye out for creditors that you don't recognize, balances that seem too high, or negative information that is more than seven years old. Pay special attention to any "public records" listed: Credit bureaus search courthouse notices for information about judgments and bankruptcies. If you have the same name as someone with legal troubles, his court case can end up on your credit report. Contact the credit bureaus, either online or through the mail, with your findings. By law, the credit bureau must investigate your claims and report their findings to you. If the credit bureau cannot verify what is on your report, it must delete it.
Negotiate With Creditors
Accurate credit report information is trickier to remove, but some people have success by asking a creditor to remove negative information in exchange for paying off the account. If you make such an arrangement with a creditor, be sure to get your agreement in writing before sending them any money.
Responsible Behavior
Your credit will improve over time if you demonstrate responsible credit behavior with your other accounts. If you have a credit card, student loan, or other debts that require ongoing payments, be sure to make your payments on time. If possible, pay down any balances on the credit card accounts that you do have: Fully 30 percent of your credit score is determined by how much of your credit limits are actually in use, according to MyFICO.com. The lower your balances in comparison to your limits, the higher your score will climb.
Common Mistakes
Never close your credit card accounts while you are trying to repair your credit. This will reduce the amount of available credit to you, making your debt to credit limit ratio higher. If you are afraid of temptation, ask a trusted family member to hold your cards for you or lock them up yourself in a bank safe deposit box.
Avoid taking a shotgun approach to getting new credit. While getting a secured or low-balance credit card can help you rebuild credit, too many credit applications can lower your score. Research your options carefully and select a card that you know that you qualify for to avoid having submit multiple applications to different credit card companies.
0 comments:
Post a Comment