Do-It-Yourself Credit Repair: Actions That Get Results!
By James Young on April 26, 2013
Despite increased media reports about the importance of credit, many consumers remain mystified by the credit process and have only a vague understanding of what they need to do to ensure their credit is as good as it can be. While the credit industry may seem confusing, the good news is that taking the right steps to improve poor credit – and look better to lenders – is actually a pretty straightforward process.
Here are some simple ways to jumpstart your own do-it-yourself credit repair process:
- Begin by getting a copy of your credit report. In the U.S., all consumers are entitled to a free credit report from each of the three primary credit bureaus (Equifax, TransUnion and Experian) every 12 months. To get yours, visit the website at www.annualcreditreport.com or call toll-free at 877-322-8228.
- Once you have your report in hand, review your credit report carefully, making note of any possible errors, like incorrectly reported late payments or over-limit events, and make a list of every error you find.
- If you find errors, notify the reporting bureau as soon as possible either by using their online forms or via “snail” mail. When using the latter method, be sure to specify the nature of the error including the account name and number and the date when the error was reported. Be polite but firm.
- Avoid applying for new credit or increasing existing lines, especially when shopping for mortgages, insurance or car loans. Each time you apply for a new credit card or other loan, the lender sends a notice to the credit bureau indicating you’re looking for credit. While occasional applications may be considered “normal” by many lenders, multiple applications made over the course of a few weeks or even months can be seen as a red flag to lenders who may perceive you as being in financial straits.
- Pay down existing balances. Consumers with lower ratios of debt-to-credit limit will earn higher “grades” from the credit bureaus. A good rule of thumb is to try to keep the amounts owed on credit cards to no more than 20% of the card’s total credit limit.
- Finally, commit yourself to using your credit wisely moving forward. Even if you’ve had credit mistakes in the past, adopting good habits now is important to ensure your credit improves in the future.
To help consumers learn more about credit and their rights under the Fair Credit Reporting Act, the Federal Trade Commission has set up a handy website featuring answers to a lot of credit-related questions. Visit them at http://www.consumer.ftc.gov/topics/money-credit to learn more about how to keep your credit in tip-top shape.
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