If you have rough credit history on your record I have some very good news. You aren’t doomed to a financial life of misery because of your past. While bad credit is very expensive, there are plenty of things you can do to clean up that history, bump up your score and start enjoying the benefits of having a strong credit profile. And you can get this done much faster than you might think.
Important Note: The following is a step-by-step process to help you clean up your credit history. If you follow these steps you absolutely will be able to fix and clean up mistakes and errors. It does take time, patience and perseverance.
You can certainly do this yourself if you have the time or you can outsource the work to a reputable firm like Lexington Law (you can also call them for a free credit repair consultation at 1-800-293-3672). They are highly proficient, completely focused on credit repair and the industry leader with a stellar track record and professional standing.
Also, many people find that it’s cheaper to go this route than to do it themselves because of all the time and frustration it saves. Again, it’s not a requirement. Plenty of people do this themselves. But outsourcing this task is an option you have and one that may be worth considering.
Let’s get right to it.
1. Order Your Credit Report
You can’t solve a problem until you confront it. And when it comes to credit repair, the only way to fully comprehend your situation is to order your credit report, read through it and understand what you are looking at.
Fortunately this is easy and cost effective. You can get your credit report for free once a year from each of the three credit reporting agencies. You probably already know this. But what you may not know is that it’s smart to order all three at the same time.
The reason is that not all credit bureaus have the same information. That’s because each creditor decides who they want to report to – if they report at all. That means one report could have errors, mistakes and problems that sink your credit score but those problems may not show up on the other two reports. And if you don’t check each of the reports, you may never be aware of issues that weigh your credit score down.
TIP: The bureaus have to supply you with a free credit report annually as I noted. But if a someone denies you credit, insurance or a job based on a credit report, the bureau that supplied that information must also provide you with a free report on demand. The only caveat is that you must make your request within 60 days from the time you learned of the adverse decision by the vendor.
2. Identify The Mistakes And Other Items You Can Challenge On Your Report
Your credit report contains all your financial history – and I mean all of it. Since there is so much data involved, your report may contains errors. In fact, a recent study found that up to 20% of all reports do contain mistakes.
That being the case, your first order of business is to read your report very carefully and identify those reporting blunders. My recommendation is to actually print out your report on paper. That will make it much easier for you to quickly put your finger on the information you’ll need when you start cleaning up all the errors you are about to find. Here’s what to look for:
- Is your personal data accurate? Is your name spelled correctly? Is your date of birth right? Did you actually live in the places the report lists as your current and prior residences?
- Are all the accounts listed actually yours? Do credit cards show up on your report that really belong to someone else? Did someone take a mortgage or loan out under your name fraudulently?
- Is the listed activity accurate? For example, you might see a late payment listed on an account in error. Look carefully for those mistakes friend.
- Are the account details correct? Are the credit limits right? Is the type of credit listed accurate?
- Is any information missing? For example, sometimes accounts you closed long ago are listed as open. That’s not something to let stand.
- Are the listed items supposed to be listed? The law states that most negative items have to come off your report after seven years. If your report contains stale data, demand that it be removed.
TIP: Information about a past bankruptcy stays on your credit report for 10 years. Unpaid judgments can be reported for 7 years or until the statute of limitations is over (whichever is longer). Also, if you have a criminal conviction that stays in your credit file and it will never come off your report. The same holds true if you applied for life insurance or credit in excess of $150,000. That’s part of your permanent credit report.
- Is the information complete? Under the Fair Credit Reporting Act negatives must be accurate and verifiable of course. But they also must be complete. In other words, even if an item is technically correct it must be removed if there are special circumstances that require the bureau to remove that problem data.For example, let’s say you didn’t pay a bill because you live alone and were in the hospital for 2 months. Did you pay the bill? No. But was there a good reason for the lapse? Absolutely.
This is just a small smattering of the types of errors you might find on your credit report but you get the idea. Go through each of the three credit reports and highlight all the errors you find. Once you do that we’re ready to take the next step.
TIP: All negative items must also be verifiable. If a company that reported negative information about you no longer exists because it was sold or went out of business, the bureau may not be able to verify it. If that’s the case, the negative has to be cleaned off your report. The same holds true about negative items that aren’t verified because the creditor just doesn’t feel like going to the trouble. If a blotch against your credit isn’t verified, you can assert your rights to have it taken off your credit history.
3. Collect Your Evidence Of The Mistake
If you find negative items or errors, assemble as much proof as you can to substantiate your claim.I realize that some mistakes are hard to prove. For example, if someone opened an account in your name fraudulently, it might be difficult to prove that you didn’t open the card. If that’s the case, don’t sweat it.
Ultimately, the credit bureaus and creditors have the burden of proof. They must be able to corroborate that the information listed on your report is accurate, verifiable and complete as I said. If they can’t do that, the negative items must be removed from your credit report. Booyah.
4. Contact The Credit Bureaus and Creditors
Write to both the credit bureau and the creditor (both are important). Tell them you dispute the item and include the evidence you assembled in the prior step.
Many people contact the credit bureau that reported the negative item and think their work is done. Nothing could be further from the truth. All the credit bureau has to do is get the creditor to say that the debt is accurate.
If they get that far, they’ve complied with the law and they don’t have to do anything further. That’s why you also need to go to the creditor and demand that they also prove that the negative item is accurate and verifiable.
Notice that I suggest that you write rather than call or email the bureau and creditor. Here’s the reason. You have legal rights that protect you from credit bureaus, creditors and credit collectors. That includes your right to obtain all the proof the other party has about these negative items, your right to be treated fairly and your right to be left alone and not pestered by credit collectors. But you may lose these rights if you don’t correspond in writing.
The credit bureaus and most creditors have special addresses to send your inquiries. Use that address rather than the address listed for payments. And while you are at it, send the letter overnight or with a “return receipt” so they can’t claim they never received your correspondence.
Along with your letter, make sure you include copies of all the proof you can to support your allegation that the reported item is wrong. Make sure to highlight the items in question and send in the credit report itself. Obviously you should keep the originals of everything you send for your own records.
In your cover letter, tell the bureau which entries you dispute and why. End the letter by telling the bureau and the creditor what you want them to do; correct the error immediately.
TIP: While you are in process with the credit bureaus and your creditors, don’t use templates you download from the internet. These organizations get tens of thousands of letters each day and they won’t give your complaint nearly the same attention they would if you write a personalized letter.
5. Creditor Process
The bureaus have to look into your dispute within 30 days. (The only exception is if they think you’re making a frivolous dispute. If that’s the case, they’ll blow you out of the water and you’ll have to start all over again. Whaaa)
As part of their investigation, the bureau will send a copy of your dispute to the creditor who reported the negative item. Then the vendor has to look into your matter as well and report back to the credit bureau with their findings. As I said, you still need to contact the creditor in parallel if you want to show each of these parties that you mean business and you are ready to fight for justice.
If the creditor admits that the data is flawed, they have to inform the bureau and the bureau has to correct your report. Either way, the bureau must send you a letter with the results and a new copy of your credit report if there is a change as a result of the investigation.
TIP: Keep an eye on your report. And don’t get complacent if you win your case. If the vendor later proves the information is indeed accurate, verifiable and complete, they can re-report the negative item and it will show up again on your credit file.
6. What Happens If The Bureau Or Creditor Agree With Your Claim?
If the results do go your way, the bureau will notify any party who reviewed your report within the last six months of the correction as long as you ask them to do so. You can also ask them to send notification of the correction to any prospective employer who looked over your credit history over the last 2 years.
Even if the results don’t turn out as you’d like, the bureau has to make a note in your file that you dispute the item and that note must be included in any future credit reports. They must also send a notice of your dispute to anyone who reviewed your history in the recent past.
Again, they won’t do either of these two things unless you ask in writing. You may have to pay a little for this but it could be worth it. Exercise your rights Pilgrim!
7. Call In The Artillery If Things Don’t Work Out
Credit bureaus make lots of mistakes and they clean up many of them if you bring it to their attention in the correct way. But they don’t acquiesce to every request.
As I said above, if they think you’re making a frivolous complaint, they’ll shut you down without even looking into the matter. If there is a negative item on your report that is accurate and verifiable they won’t budge either. But that doesn’t mean your case is lost.
If you can make a valid claim that the charge doesn’t tell the whole story and is incomplete, you might have a shot at getting it removed as I said above. These are the cases when having an expert at your side might really make the difference.
And if all else fails, you have Father Time to lean on. Remember, most negative items have to come off your report within 7 years. You may just have to wait it out compadre.
TIP: Older credit history has less impact on your score than recent financial activity. That means if you practice good credit behavior now, you still may be able to make up for those prior blemishes. This process takes a little longer than credit repair, but with the proper activity, you can absolutely revitalize your credit picture pretty quickly.
Credit repair is not brain surgery. There is a process and if you follow it, know your rights and exercise them, you can get impressive results. If you don’t have the time to do all this yourself, there are a few reputable firms that can help you. If I had to fix my credit, I’d outsource this immediately. But regardless of how you approach your credit history improvement plan, I encourage you to go for it. What have you got to lose?