Tips for Credit Repair or Clean-up of Bad Credit
Credit repair is not a mysterious or difficult process, despite the claims of repair companies that want you to use their paid services. Legitimate repairers do the same tactics you can use to clean up bad credit for yourself, according to the Federal Trade Commission. The Fair Credit Reporting Act and its 2003 amendment, the Fair and Accurate Credit Transactions Act, give you the legal tools you need to dispute mistakes and old information.
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Clean Up Credit Regularly
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Your credit reports are accessible for free once a year through AnnualCreditReport.com (see Resources). TransUnion, Equifax and Experian must all give you one report every 12 months through that site under FACTA. Get a single report every four months rather than ordering all three together. Spreading them out lets you search for repairable mistakes regularly.
Catch Every Mistake
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You may legally dispute every mistake on your three credit reports. The only restriction is a ban on frivolous disputes, which the credit bureaus may ignore. Negative items can have errors in everything from spellings to amounts to payment dates. Pinpoint even the smallest inaccuracies, as long as the data is truly wrong in some way, because every dispute you file opens the possibility of having the bad credit item removed from your credit bureau records.
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File Detailed Disputes
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Effective credit repair depends on detailed disputes because TransUnion, Equifax and Experian can dismiss unfounded complaints. Put your disputes in writing instead of using the credit bureaus' online forms, the FTC recommends, and break them all out separately, with individual explanations. Include printouts of your account statements, canceled checks, contracts or other evidence supporting the disputes. The bureaus contact your creditors for validation, but they have to erase the data in question if they do not get a satisfactory response within 30 days or their inquiries are totally ignored.
Remove Outdated Information
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Mistakes are not the only items you can clean off your credit reports. Most negative entries may only appear in your TransUnion, Equifax and Experian files for seven years, although the bankruptcy reporting time runs 10 years. Follow the same dispute process for old information that you use for mistakes, but state in your letter that the data should be removed because the reporting time frame is over. The bureaus should remove it promptly after getting your complaints.
Make Deals With Creditors
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You have no legal grounds to dispute accurate negatives on your credit reports, but you can sometimes fix charge-offs and collection agency entries by making deals with the creditors. Offer a lump-sum settlement and include a requirement that the lender or debt collector wipe out the account on your reports once you pay. Ask for a written commitment prior to sending the agreed-upon payment.
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References
- Federal Trade Commission; How to Dispute Credit Report Errors; September 2008
- The Motley Fool; How to Fix Credit Boo-Boos; Dayana Yochim
- Federal Trade Commission; Credit Repair, How to Help Yourself; October 2008
- Bankrate; Removing Charge-Offs From a Credit Report; Steve Bucci; July 2003
- MSN Money; Raise Your Score to 740; Liz Pulliam Weston; June 2010
- Privacy Rights Clearinghouse; How Private is My Credit Report?; September 2010
