Repairing Bad Credit

How do you go about repairing bad credit? There is no overnight solution, but it can be done. When repairing bad credit, keep in mind that this can be done by you. You do not need a credit repair company to do this for you. It is definitely something that you can do on your own. However, if you do not want to take on the task of repairing bad credit yourself there are companies that can help.




How do you repair bad credit on your own? The first thing you need to do is to get a copy of your credit report from all 3 major bureaus. Read them over carefully and make note of any incorrect items. Be sure to dispute these items. Then look at the items that are having a negative effect on your credit. It's not only the collection accounts or delinquent payments. Other things that will look negative to potential lenders are high credit card balances and a lot of credit cards close to their limit. If you have this problem, the best thing you can do is to stop using the cards and pay down the balance. This step alone will help greatly in repairing bad credit. The next thing you need to do is to contact the collection accounts. You are entitled by law to know who the original creditor is. You also are entitled by law to request they send you proof of the debt’s validity within 30 days of your written request. Once you have that done, you are left with accounts that you know about, and you must pay off.




When repairing bad credit on your own, contacting old creditors will be necessary. This can be unpleasant but it has to be done. Request a payoff balance from them. Once you receive this payoff amount, call the creditor. Ask them to agree that they will remove the negative items from your credit file once they receive payment in full. Use wording like “… after you receive payment in full the account status must be changed to current and paid in full …“ They can also change it to current and paid as agreed. No matter what, get them to remove anything that refers to it as a collection account. Tell them that you are going to send them a letter, recapping this telephone conversation. They need to sign it and return it to you. Once you receive that signed letter, you will then send payment in full. When dealing with collection agencies, tell them that they have to remove all references to the debt. You do not want to see a collection agency on your credit file. Do the same thing with the letter as before. Always send the letters, certified mail and be sure to have the certified mail number typed in the “re:” part of the letter. For example: the letter to Company, Date, RE: Account 1234, me vs. them, sent certified mail # 111 222 333. This is very important. They can always claim they did not get the letter or that they never received the letter you claim you sent. With the reply card signed and the signed letter, you have legal proof that you sent it to them.




What do you do about repairing bad credit when you really cannot do it yourself? There are credit repair companies that can legitimately help you. Tread carefully here, it is a buyer beware situation. There are many unscrupulous companies that offer instant credit repair that are scams. Use common sense and if they make incredible promises, they probably are scams. A legitimate credit repair company will look at all of your bills and outstanding debts. Some will put you on a very tight budget allowing for living expenses, but not for the extras. The object is to keep current bills current and to start paying off old debt. Many of these companies can work with creditors to get your payments reduced. Credit counseling is also one of their services.
Bad credit can be repaired. It cannot be done overnight. It will take diligence on your part, but once you accomplish it you will once again be able to get the best insurance rates and borrow money again. Once you have reestablished your credit, be sure to manage it wisely. It is a long road to repairing bad credit but you can get there.