Negative credit can result in the denial of loans, insurance, and employment. It can result in higher rates for standard services like cell phones. Therefore, it's important to know your credit score and to take steps to improve it. The following strategies will help.
Removing Negative Items
The process of credit repair begins with understanding your credit report. You are entitled to one free copy per year from each of the major bureaus--Equifax, Transunion, and Experian. According to Bankrate.com, the reports from each bureau are usually different. Therefore, it's important to study the reports from each. These may be obtained at www.annualcreditreport.com.
When reviewing your reports, look for any negative items. If any listings are incorrect, you must dispute them. When disputing items, prepare a letter that explains your situation, and send it as certified mail to both the creditor that reported you and to the bureaus that are circulating the reports. According to Bankrate.com, the credit bureaus must investigate any dispute within 30 days of receiving your letter. If the creditor cannot verify the item, then it must be removed. The credit bureau will send you a copy of your report when the item is removed.
Building Good Credit
According to Bankrate.com, paying off existing debts and building good credit will help counteract any negative items that are accurate and cannot be removed. If you're unable to make the required payments, call creditors and ask to create payment plans that will allow you to make partial payments each month. If you have fees that have gone to collection, establish a payment plan with the collection agencies and ask that they not report you to the major credit bureaus as long as payments are made. If you have funds available but tend to miss due dates, contact your creditors and arrange for a monthly payment to be automatically withdrawn from your bank account.
Secured credit cards are an excellent option for people with damaged credit. These cards require applicants to make a deposit into a savings account. The deposit sets and secures the credit limit on the card. If a cardholder fails to pay, the bank will simply deduct the payment from the savings account. According to Bankrate.com, the most important consideration when choosing a secured card is to make sure that the creditor is reporting to the major credit bureaus every month when you pay on time.
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