How to Repair Your Credit Score One Step at a Time

Credit, can't live with it and can't live without it. What a vicious cycle we put ourselves in, mostly because of our desire for immediate gratification with purchases we don't really need. So how do you repair your credit score? Bad credit scores impact you in ways you wouldn't think of. Your auto insurance and homeowner insurance companies use your credit scores in determining your premium. Late utility bills and even library fines are now reported to credit reporting agencies. We all know having too many cards with high balances lower our scores, but did you know having open accounts with no balances or activity in long periods of time also have a negative impace on our scores? Yearly review of our credit reports is extremely important to maintain a good score. According to the Fair Credit Reporting Act document filed by the Federal Trade Commission on July 30, 2004, negative outdated information must be removed after 7 years, exceptions would be bankruptcy. Some of the items listed on your report include such things as employment, residence addresses, convictions and tax liens. Student loan defaults my stay on credit reports longer than 7 years. There are many ways to improve your credit score, here are a few steps to try.

Difficulty: Moderately Easy

Instructions

1. Contact the three main credit reporting agencies and ask for your free yearly report. Review and note any discrepancies . You have a right to dispute incorrect information, write a letter to the credit reporting agency and include facts that would help them. They are not going to take your word that something is incorrect, you must provide as much information as possible and ask that they re-investigate your claim. The credit agency must conduct a "reasonable investigation" and either delete it or correct it within 30 days.

2. Write a statement of up to 100 words to include in your credit report if there are errors you cannot get removed. Keep in mind, if you are just making things up to try to improve your score, the credit agency does not have to include your statement. But if you have some facts to back up what you say, it may help to include the statement.

3. Close any delinquent accounts. Better to have your report say closed by consumer than to say closed by creditor. You will still have to pay the account, you just won't be able to charge anymore.

4. Close any accounts not used in a long time. They can have a negative effect on scores.

5. Pay extra on only one your debts each month. Pay the minimum on all but one and put any extra funds you have on that debt. When you pay it off, take all the money you were paying on it and add it to the minimum you are paying on the next debt.

6. Call all your creditors, explain you are trying to catch everything up and plead your case, don't lie, don't get angry, just tell them the facts. Then ask if it would be possible for them to lower your interest rate. Even if just for a 6 month period. Be grateful for anything they offer.

7. Get a small loan from a credit union or bank, credit unions are usually more lenient, ask someone to cosign for you if you must. Take out a small loan, say $500.00. At another credit union open a savings account and deposit the $500.00 into it. But don't touch it! Each month take enough money from the savings account to pay the payment on the loan. Pay it on time, or better yet, ask if the credit union will take an automatic payment from the savings account to pay the loan payment. This will show on time payments and will help to improve your score

Tips & Warnings

• Keep a 3 ring binder with sections for each agency and creditor and subsections for correspondence and reports. Keep all envelopes reports come in, they have the postmark date. You may need it in the future.
• Have blank paper handy to make notes of conversations, get the person's name and agent code or contact information as backup.
• Trans Union-P. O. Box 1000, Chester, PA 19022 Tel: [phone]
• Equifax-P. O. Box 740241, Atlanta, GA 30374-0241 Tel: [phone]
• Experian-Tel: [phone]
• Get your free credit reports from www.AnnualCreditReport.com

[ecugirl2009]

on 11/29/2009 Love this! Thanks so much!

[rakhib]

on 11/24/2009 very well written.you almost sound like Suze Orman.Bravo!
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