Your credit is your financial identity – your financial DNA – your financial resume. Your credit is one of the most important aspects of your life and can help you or hurt you during the course of your life. Credit affects many aspects of your life such as applying for a job, applying for a home or apartment, or applying for a personal loan or credit. Don’t be discouraged if you have bad credit. You can restore your credit and still achieve your financial goals.
The first step to repairing credit damage is by ordering a copy of your credit report from the three major credit bureaus, Experian, Equifax, and TransUnion. Review your credit reports with a fine tooth comb checking the following information for accuracy: name, address, phone number, SSN, date of birth, current and previous addresses, accounts, account numbers, open and closed dates, status of the account, owed amount, and payment history.
Once you have reviewed your credit report determine if you have any past due accounts. If you have bad credit due to the loss of a job, health issues, family issues or a disability let the creditor know right away. Call the creditor to setup a payment plan to pay back all debt owed. Determine the monthly amount you can afford, don’t let the creditor determine the amount for you. If the creditor offers a settlement request that the credit list the account status as “paid” or “paid in full” instead of “settled” or “settled for less than full amount”. If you account is listed as “settled” this will lower your credit score although the account was paid.
If you are currently unable to pay your debts due to unemployment and financial problems request a financial hardship and request a reduced monthly payment and reduced interest rate for a period of one year. During this time you will not be charged late fees and you be able to make your credit until your financial situation improves.
If you find errors on your credit report write a letter to the credit bureau that is reporting the error or request a dispute investigation online by visiting the credit bureau’s website. Provide any supporting documentation to prove your claim. The credit bureau will respond to your letter within 30 days from the day of receipt. Keep copies of all correspondence sent and received in the event you need to reference it in the future. If you do not receive a response follow-up with a letter to the credit bureau to verify the updates were made. Order another copy of your credit report after 45 to 60 days have passed to verify the updates were made.
If you dispute an error and the credit bureau or company that listed the error refuses to update the information on your credit report you can write the credit bureau reporting the error and request that a one hundred word statement be added to your credit report for that account. This help increase your chances for approval in the future.
If you have an account that has a late payment history you can request that the company re-age the account once you have made consecutive payments on time for a period of 9 to 12 months. The delinquent (negative) payment history will be removed from your credit report which will increase your credit score.
Additional ways to repair damage to your credit are: keep your balances at 50% or below the credit limit, don’t open more than 1 new account in a 6 month period, don’t do business with “bad credit, no problem” companies, order your credit report each year, avoid foreclosure and bankruptcy, consolidate debt with caution, consult a professional, don’t ignore past due bills and setup automatic bill payment to ensure bill are paid on time.
Protect your credit as your would your life, guard with care. “Money can generate wealth or generate debt, you make the choice.”