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How can I repair my credit?

The laws are in place that allow for anyone to dispute their own credit. You have that right but do you know what to do with it?

The average person has so little understanding about how the credit reporting process works that they become ineffective at working through the red tape to get results. The simple truth is you CAN just write a letter to the bureaus challenging ANYTHING on the report. The key is knowing what to challenge and how to challenge it. The bureaus get paid for each account reporting and they will fight to keep them. They have a plethora of template letters designed to stall, intimidate and even scare people away from these disputes.

Still, its your right so what should you do?

The first thing you need to do is read the “Fair Credit Reporting Act” (FCRA) and the Fair Debt Collection Practices Act (FDCPA). These 2 are paramount in formatting a proper dispute that will have  the appropriate ammo to warrant attention. You will want to pay attention to particular aspects of each account and a possible avenue to challenge. For example, maybe one of the creditors has been harassing you and leaving  intimidating messages etc.. You would want to look closely at the Fair Debt Collection Practices Act as this will have the rules for that type of engagement. 

Also, each account on your report should be accurate. It is very likely that one or more differences exist on any account between one or more of the bureaus. I have found that they report conflicting information frequently. 

You are looking for mistakes, outdated information, conflicting information etc. These are the basis for your dispute. Once you have this you format a written dispute to submit to each bureau individually.  Your letter should include you name, current address, date of birth and last 4 of social to authenticate you. The bureaus make it easy to submit these disputes electronically but I advise against this. It waives your rights to due process by mail within 30 days. This is part of your ammo for forcing the removal of these items. The bureaus never get anything done quickly. Mail in your disputes.

If you have done your homework and have a clear idea what you are disputing and why, your disputes will deserve attention but don’t get too discouraged when that doesn’t get the desired response. Most disputes will end with a template letter (or none at all) that has nothing to do with the specifics of your dispute. You have to be persistent and stand on the laws provided and demand action. You have to be able to state your case clearly, in writing, and be able to follow up on the bureaus lack of responses with aggressive intention. It takes research and lots of time…for the research and the follow up responses. If you are prepared to put forth the effort you CAN get the results yourself.

However, some things are better left to a professional. I used to change my own oil and brakes. Changing a head gasket didn’t intimidate me. But with todays computers I won’t touch anything under my hood. I could do some serious damage tinkering.

Your credit profile is very important and should be protected. The bureaus will do anything to cause you to validate these items and let them off the hook! They make that very easy! Getting results takes work WITHOUT these mistakes. If you are not 100% confident in what you are doing or don’t have the time to stay on top of this don’t attempt it yourself. Improper methods can cause the items to be flagged and all future disputes to be considered frivolous.

Good luck! Remember, read all the appropriate laws, format a clear dispute for each item and stay on top of it. If you would rather have a professional take the ball give us a call at (888) 514-5460. 

What is the fastest way to improve credit score?

Understanding what influences your scores is the first step to managing a credit profile. Most people have absolutely no idea what effects the score movements. There are very specific things that you can do to improve your credit score. Here is what you need to know:

ON TIME PAYMENTS

Your scores are a combination of multiple factors, not just whether or not you make on time payments. While timely payments has the largest influence on the scores as a whole the effect is slow and takes place over years not months. A solid profile shows no lates for the entire 7 year profile.

REVOLVING DEBT BALANCES

Credit cards are a revolving debt. This is defined as any account that has a credit limit that you can use, pay down, and use again (except an equity line which is secured by real estate). The balances you carry on these accounts directly effects your score movement, and at a more dramatic level. Your balances are compared to the credit limit of the account to establish a DEBT-LIMIT RATIO. This is the credit limit divided by the balance of the debt. (i.e. $1000 credit limit with a $500 balance has a 50% debt-limit ratio). This is an important factor to understand and manage. The higher the debt-limit ratio the lower the scores will drop! Optimally you should keep these accounts below 30% of the credit used. Higher ratios indicate potential risk for lenders and will subject you to higher rates and potential disqualification. Debt-limit ratios are the easiest item for you to manage and improve credit scores quickly. Pay down the cards…period.

CREDIT DIVERSITY

Having 1 or 2 low credit limit cards with no other credit will not be enough to qualify for most home loans and many other forms of credit. A diverse profile includes a few revolving accounts, an installment loan (car loan or any fixed payment loan), and a real estate account (mortgage or home equity line). Having this diversity with on time payments and low debt-limit ratios on revolving debt will produce the highest possible scores. It’s fairly easy to get a credit card and a car loan. That handles 2 of the 3 major types of accounts. Managing them properly with on time payments and keeping revolving debt down will put your credit in position to qualify for a mortgage should your income qualify.

AVERAGE AGE OF ACCOUNTS

Again, this is a part of the scoring component that has its affect over a long period. Over time, if you are maintaining your accounts and keep them active your profile will show an average age that is higher and this will have a small impact on your overall scores.  As a result, opening a new account can actually shift scores slightly lower as this new, untested account is added to the profile.

APPLYING FOR CREDIT – NEW ACCOUNTS

This is the number 1 most misunderstood factor that has a direct and immediate effect on scores. Each time you apply for credit an INQUIRY appears on your credit profile for all other lenders and creditors to see. If it results in a new account then you will almost certainly see a mild score pull back as described above. However, if it does NOT result in a new account it raises a flag as to why. Again, each subsequent creditor that pulls the report can see that you applied and either there is a new account that doesn’t show yet, or you were denied credit. In either case, it causes issues with approvals for home loans, ANY business credit etc. The biggest violator of this factor is auto finance applications. Dealers commonly will not disclose that they will have 5 different banks pull the credit resulting in 15 total inquiries between the 3 bureaus! This will drive scores down as the number of inquiries takes its toll on recent activity. Also, if you were denied credit…STOP APPLYING! Trying elsewhere is only digging a deeper hole.

RECENT ACTIVITY

Lastly, its important to understand that RECENT activity outweighs EVERYTHING. With that said, if new collections appear, your current balances on revolving debt moved up, you are late, or apply for too much credit etc. your scores will take a hit. Its up to YOU to manage these issues if you expect to have a solid credit rating.

I have discovered that those who need this information most are the last to read it. So if you read the entire article you are already ahead of most. Put it to good use and it can change your life.