Credit Repair Success Strategies

If you are suffering from bad credit, it may take time to repair it and increase your credit score. There are, however, specific strategies for getting back on track for effective credit repair. It is important to periodically order a credit report and check it thoroughly for discrepancies. Dealing with negative activity quickly gives you the best chance at repairing your credit.

Dispute Inaccurate Activity

Federal law gives you the right to request an investigation of inaccurate activity that appears on your credit report. There is no charge to dispute activity, but some individuals choose to hire someone to handle this process on their behalf. When a company denies your application for credit or employment, you have up to 60 days to request a free credit report from the credit bureau used to determine your creditworthiness. You can use a form provided by the credit bureau or write a formal letter to dispute inaccurate activity on your credit report. State the facts and reasons you believe the information is inaccurate in your dispute letter. It is important to document all correspondence sent and received in relation to your disputes. Include any documentation that may prove the activity is inaccurate.

Pay Off Balances

Pay off old balances that are charged-off or sent to collections. You can often negotiate with collectors for reduced settlement amounts. Many debt collectors and creditors allow you to make monthly payments within your budget until the debt is paid off. When you have paid a debt or settled it in full, demand that any negative remarks be removed from your credit report. Obtain written agreement from the debt collector before sending your payments. If you have many unused, high-interest credit accounts that are paid off, slowly close them out over several months. Close the newest accounts first so that you do not lose your long-standing credit history.

Utilize a Credit Counselor

You may want to use a credit counselor if you're having difficulty paying debts. Many nonprofit credit counseling organizations offer services to help solve financial problems. Services provided by legitimate credit counselors include assistance with budgeting and providing free educational materials and debt and savings classes and workshops. It is best to choose a company that provides face-to-face consultation. A credit counselor may suggest you enter into a debt management plan if your financial situation hinders you from paying your bills entirely. Only sign up for a debt management plan after a credit counselor has spent time analyzing your financial situation and has exhausted all other options.

Re-establish a Stable Credit History

A large portion of your credit score is derived from your payment history. It is important to establish a new timely payment history after you have paid off old debts. Avoid getting too many credit cards when you're trying to reestablish your credit. Secured credit cards and unsecured credit cards with small credit limits and reasonable interest rates are good options for individuals seeking to repair their credit. Make sure that you make payments on time every month, even if it is only the minimum amount due.