People from all walks of life suffer the effects of bad credit. The recent downturn of the economy has only compounded the problem. It is much more difficult to function financially when you have bad credit. While it is almost impossible to borrow money if you have bad credit there are also other complications such as being charged higher deposits, interest rates and so forth. It is just more expensive all-around when you have bad credit.
Given enough time your bad credit can fix itself. Most listings will only stay on a credit report for 7 years. However, many people need results sooner than that so a proactive approach is necessary. There are some steps you can take to repair your credit and begin working towards regaining your good credit.
The very first step you should take is to collect your free yearly report from each of the three main credit-reporting bureaus, Equifax, Experian and TransUnion. You are entitled to one free report every year from all three of the credit bureaus under the Fair Credit Reporting Act. For a fee you can also get one report that combines all three.
Once you have your report-in-hand you will need to scrutinize it carefully to find any errors, inaccuracies or discrepancies. In 1970 the Fair Credit Reporting Act was enacted to protect consumers from unfair credit reporting. The FCRA gives consumers the right to dispute any erroneous information that is on a credit report. It has been estimated that as high as 75% of all credit reports contain errors.
After receipt of a dispute the credit bureaus have 30 days in which to verify the correctness of their reporting or remove it from the report completely. It has been projected that up to 40% or more of all disputes end up favorably for the consumer so it is well worth it to issue a dispute. It is possible that the first letter doesn?t work however, so you may need to be persistent and keep sending in the dispute until you succeed.
It is also important to establish some new and better credit. If you are unable to get credit through the traditional ways you can start with a secured credit card or bank note. With secured credit you will be required to put a certain amount of money into an account, which will then be used as security for the credit. In as short a time as 6 months of making consistent on time payments you will be able to make a significant difference in your credit report and scores.
You also need to do what you can to improve your debt to credit ratio, either by paying down debt or getting your credit limits raised. Do not just randomly pay off old debts or charge-offs because credit is reported based upon the date of last activity. When you pay off an old debt you are really just succeeding at bringing the negative credit forward in time to start the 7-year grace period over again.
You can complete credit repair all on your own and you do not necessarily need professional assistance. However, it can be extremely time-consuming and it does require a certain level of knowledge and expertise so you may want to consider looking into the services of a professional credit repair service.