Your credit history has a major impact on your life. It is in your best interest to pay all of your obligations on time. Occasionally, you will discover incorrect information on your report. You should try to get incorrect information removed as soon as possible. You should obtain a copy of your credit report every year from all three major credit-reporting agencies. You can get a copy of your report by writing to the agencies or going online to one of several companies that will send or e-mail you a copy.
Credit Bureaus
Carefully review each item on your report and question any items that are not correct. Some websites let you do this online (see Resources). Others require you to write to the bureaus. If an item appears to be correct but you are unsure, it will not hurt to question it. The credit bureaus will take about 30 days to research your questions, and then they will send you an updated copy of your report.
Establish Additional Credit
If you have a limited amount of credit, you should try to add some positive items to your report. One way is to apply for a secured credit card. There are several offering a Visa or MasterCard with a credit limit equal to the deposit you put into their bank. After you show an excellent payment history with the creditor, they will often increase your credit limit without requiring an additional deposit. Another way is to make a deposit in your bank in a money market account or a certificate of deposit. Request a secured loan for the deposit amount and make your payments on time. Another method is to buy a used car. Many car dealers will give you an auto loan with poor or little credit if you agree to make a substantial down payment.
Timing
Good credit can take a long time to establish. If you work hard to make all of your payments on time, your credit report will gradually look better. It is not something you can clean up overnight. Your credit score will start to go up every month you make all of your payments on time. Unfortunately, it will go down a lot faster if you are late making a payment. Keep a list of all of your creditors, and write the date that you send in a payment in your calendar. Be sure you list the date that the payment is due. Refer to your calendar on a regular basis to ensure that each creditor is paid on time.
Credit Repair Companies
Many credit repair companies are a waste of time and money. They cannot clean up your credit any faster than you can. They send the credit bureaus a letter every few weeks questioning a few items on your credit report. They tell you that by repeatedly questioning the same items, the credit bureaus will eventually remove them. This is not true. Save your money and use it to pay your bills on time. If the company asks for money up front it is probably just trying to get your money. Do not pay for credit services until you are satisfied with the work that the service does.
A legitimate credit repair company is one that will help you in budgeting and creditor negotiations, while helping you to manage your obligations. If you feel that you can not negotiate agreements directly with your creditors and you cannot work out a budget on your own, a credit repair service may be of some benefit. Ask for references, and be sure to contact the references. You should also check the company's rating with the Better Business Bureau and the Attorney General's office in your state.
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