Guidelines on How to Repair Credit

Guidelines on Repair Credit

Credit and debt are big issues in this economy, and credit repair has become very important as well. A good credit score is important for many financial transactions, so it is important for those looking to repair their credit to know the facts.

Identification

Credit repair is defined as changing your credit card habits and payment methods in order to raise your credit score.

Significance

The Federal Trade Commission recommends reviewing your credit report and repairing your credit for three reasons: "information in your credit report affects whether you can get a loan or insurance and how much you pay for it, it's important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase, and it can help you deter, detect and defend against identity theft."

Scams

The FTC warns against companies and organizations promising fast and easy credit repair, as these are often scams. A good rule of thumb is that if a company promises fast credit repair, then they are dishonest. There is no fast way to repair your credit; it takes time.

Your Rights

The FTC lists certain rights that all consumers have regarding credit cards. You are entitled to dispute errors or extra charges on your cards (they have a form letter on their website you can use) and you are entitled to a report of why a company takes adverse action against you (be it job-related, or an application for insurance or loans).

Credit Counselors

There are many options to turn to when you need help. Once you have avoided the scam artists, non-profits and credit counselors can help you set a budget, negotiate payment plans with creditors, and organize regular, monthly payments that are manageable for you. If you cannot make a plan work yourself, consider using a credit counselor.

References

• Federal Trade Commission: Credit Repair