Credit can get destroyed by late payments, defaulted accounts, repossessed cars, collection agency accounts, bankruptcy filings and other occurrences. You can do several things to restore damaged credit, although it takes time to rebuild good credit records with the Experian, Equifax and TransUnion credit bureaus. Some people enlist the aid of professionals, such as credit counselors, according to the Federal Trade Commission (FTC) website.
Self-Help
The Fair Credit Act allows you to dispute incorrect information on your credit report, according to the FTC website, and that could improve your credit score. Credit reports often have errors. Survey firm Zogby International found that 37 percent of respondents in a 2007 study found mistakes in their credit bureau files. You can order free copies of your credit report through annualcreditreport.com once a year. Identify as many errors in your credit report as possible, especially in negative entries. Challenge the errors via the dispute forms provided on each credit bureau website. The FTC states that the bureaus have 30 days to perform an investigation, and they must erase any data they cannot confirm. Your credit rating improves if some or all of the items are removed.
Professional Help
Paying all your bills on time helps restore your credit rating. Every missed payment deadline adds a new negative item to your Experian, Equifax and TransUnion files. Consider consulting with a credit counseling company if you need help with budgeting and money management. Counseling firms are often associated with debt management plans, but the FTC advises that legitimate counselors offer various services. You may want a firm that has educational materials on its website, money management classes and counselors who can teach you to budget.
Considerations
You cannot restore your credit if you have no credit cards or loans, because you need to generate current positive activity on your reports. Consider obtaining a secured credit card if your loans and credit lines were closed as a result of past problems. Secured cards require you to deposit a few hundred dollars as collateral in exchange for a credit limit in the amount of the deposit, according to Bankrate website writer Pat Curry. Your activity gets reported to the credit bureaus, helping to restore your credit with each timely payment.
Warning
The FTC warns that credit repair scams are common, with companies making outrageous promises they cannot keep. For example, they may promise to wipe out every bad item on your credit bureau reports or to create a new identity for you. These firms may either take your money without providing the services promised or use unlawful techniques that can get you in trouble. Some charge you for things you can do on your own, such as filing credit report disputes.
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