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DIY Credit Repair

5 Steps to Do-It-Yourself Credit Repair

You know that you need to repair your credit in order to repair and strengthen your overall financial future. You’ve made the decision to tackle this task on your own. Having a 1-2-3 strategy in place is the key to yielding the results that you desire. Use these 5 steps to get you on the road to credit repair recovery.

1.      Order your credit reports. There are three reporting agencies that creditors report your credit activity to, and they are; Equifax, Trans Union, and Experian. You need to be well informed on what these agencies have on file for your credit history. Under federal law, you can obtain a free credit report every year. A top website to use is, annualcreditreport.com, to get your report to begin analyzing your scores and history. It is also helpful to know that if you have been turned down for a line of credit, insurance, or employment due to your poor credit, you can obtain a free report from one of the above listed agencies as well. Getting your report is the first vital step.

2.      Examine your reports carefully. Once you receive your report, read over it with a fine tooth comb to spot possible inaccuracies. Credit bureaus just obtain information from your creditors, they do not verify the information.

However, if there is negative information on your credit report that is true, then knowing this will allow you to devise a plan of action to improve your credit score. That may mean being more disciplined with your income and being diligent about paying bills on time.

Be aware that charged off accounts remain on your credit for seven years and bankruptcies for ten years.

3.      Double D Strategy-Dispute and Document. If you do spot errors, contact that agency and make a dispute in writing and provide supporting documents to strengthen your case for them to remove incorrect information. You need to be clear and concise with specifics stating the error and why it is incorrect.

This is when keeping important documents can be a major difference in having your claim resolved for the better. Keep copies of all forms, letters, and other supporting documents such as credit card and bank statements. The credit bureau must investigate disputes within 30 days of receiving your letter. If the dispute is verified as inaccurate, then the creditor is removed from your credit report. Keep in mind that you may also have to contact your creditors directly to resolve inaccuracies in order to resolve in a timely and efficient manner.

4.      Solve and dissolve debt. Since you have made the decision to begin improving your credit, now you need to create and implement a spending plan. Devising a plan will help you chart your progress. If you are having trouble making payments to your creditors, let them know, no two way communication can have a very negative impact on your credit.

Also, deal with collection accounts. The last thing you want your credit report to reflect is unpaid collections. Try to negotiate a pay-off settlement agreement, which could result in a reduced amount to be paid to pay off the debt entirely.

Finally, begin to slowly pay down your revolving accounts to 10% or less then the credit limit. In return, leaving 90% of your revolving accounts credit limit available will raise your FICO score.  Your FICO score reflects the number of open accounts that you have currently. Having a healthy debt to income ratio is actually beneficial to maintaining a strong credit score. Most financial experts recommend that you only keep two to four credit cards.

Other tips to consider in this category are to:

 

·         Verify that all accounts you’ve closed are reported as “closed by consumer”

 

·         Keep your balances low and avoid revolving balances

 

·         Allow yourself moderate limits, even if creditors offer to raise your limit

5.      Add Stability to your credit file. Be on the look-out for opportunities to add positive information to your credit report by adding stability to your financial picture.

If you have credit with travel, entertainment, or gasoline companies, they may not report your payment history to the credit bureaus. Inquire if they do, and if not ask them to begin to, if they agree, this can improve your overall credit score.

Also, if your credit it very poor, any credit accounts you do have, you must be very diligent about paying them on time, every time.

And lastly, make efforts to rebuild a solid credit history. Secured credit cards may be a way to begin because they come with limitations, low limits, and require some type of collateral like a deposit from you, in order to open an account. But, if you do get a secured credit card, get just one, because bureaus view a high number of “inquiries” in a negative light. Make sure you pay your secured card by the due date every month.

Oh, and make sure you open and maintain a savings account. Creditors will look favorably upon this and see your commitment to save and have reserves in order to pay your debts.