by Jaynee Sasso
Excellent credit is definitely a worthwhile goal. The credit crunch is well underway and has placed a lot of attention on those individuals with poor credit, who some say are partly to blame for the present credit crisis. We never know what the future holds but I suspect that individuals with poor credit will face many hurdles and pay dearly for their blemished past. So whether or not you desire to buy a new home car, or just to get a student loan, it is definitely something to pay closer attention than ever before.
The words “credit repair” are like music to the ears of those who have been plagued by poor credit. Everyone is looking for the magic bullet and I am sad to announce that it does not exist. You get good credit the old fashioned way: you must earn it. However, the credit reporting agencies are operated by humans and mistakes happen so you should examine your credit report periodically and correct it for inaccuracies. Reviewing your credit must be placed near your annual check up with your medical doctor on your list of priorities.
You have two main approaches when addressing your credit woes: The first is focusing on credit repair, and the second is credit rebuilding. Both play a significant role in reaching your goal of having good credit. Credit repair is more about correcting errors, whereas credit rebuilding is about engaging in behavior that increases your scores, like paying your bills on time, keeping credit card balances below 50 percent of the credit limit, and opening up new credit accounts only as needed. The process of making corrections to your credit report requires that you review your report at least twice a year. Identity theft is on the rise and anyone can be a victim. The Trans Union Corporation reported that two thirds of all consumer inquiries to the company’s Fraud Victim Assistance Department involved identity theft. Erroneous information can often be listed on your report as a result of your lender or the credit reporting agency offering misinformation or fraudulent activity caused by identity thieves. No matter what the reason, you need to address these issues sooner rather than later. Self help can be the best way to repair your credit and save money. However, you can seek the assistance of a reputable credit repair, counseling agency, or hire an attorney. Please keep in mind that no one can remove accurate negative information on your credit report.
Here are a few ways to recognize a credit repair scam, according to the Federal Trade Commission:
- A company tells you they can eliminate the negative credit information in your credit report, even if that information is accurate and current.
- A company wants you to pay for credit repair services before they do anything for you. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
- Anyone suggests that you try to invent a “new” credit identity, and then, a new credit report, by applying for an Employer Identification Number to use instead of your Social Security number.
10 Steps to Repairing Your Credit
- Be proactive and get your credit report from all three reporting agencies and check it for errors.
- Contact the consumer reporting agency who reported the error. There are three major agencies: Experian, Transunion, and Equifax. You can dispute incorrect information via certified mail, phone, or online.
- Contact creditors and file a dispute. The creditor has 30 days to verify or dispute information.
- Review your credit reports two to four months after the corrections are made to see if they reappear.
- Be organized and keep good records. Enclose supporting documentation with your dispute letter. Be sure to hold onto all correspondence from both the bureaus and your creditors regarding your disputes.
- Check for accurate negative information that may be outdated. The consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years.
- Make sure that your credit file reflects all your credit accounts. You may be denied credit because of insufficient credit on file.
- Add a consumer statement on your report explaining why an accurate negative mark is uncharacteristic.
- Defend yourself against identity theft by placing a fraud alert on your credit reports, close accounts that have been opened fraudulently, and file a report with the local police.
- Some credit issues will only go away with time and patience. Give yourself a jumpstart toward better credit by keeping debt under control and paying bills on time.
Jaynee Sasso is President of Faithful Assistants Inc. and creator of coaching program, “The Commonsense Way to Wealth.” Email infodesk@FaithfulAssistants.com with questions or comments.