Do it Yourself Credit Repair

By Carol Mendes | Translation: Ann Fain

We all want the highest credit score possible – but how do we get there? In today’s economy, your financial health means everything, so it’s crucial to make sure your score accurately reflects your credit history.

When a creditor orders a credit report, it’s like a snapshot of your financial and personal life. If all the information is accurate, it should factually reflect your outstanding credit, payment history, the status of your credit accounts, and any information that can be found in public records. But that all depends on when your creditors report their data about you – and a few days can make a big difference in your report.

To find out what your creditors see in you, order a free copy (you’re entitled to one a year!) from each of the credit reporting agencies: Equifax, Experian, and TransUnion. Once you have your report, you can ensure it says what you need it to say by taking seven simple steps.

First Step: Check Your Identifying Information

When you do get a copy of your credit reports, the first thing you should check is the personal information section. You’ll find the primary name for which you ordered the report, followed by a list of one or more former names. Women may have a particularly long list if they have been married several times.

Your Social Security number should not be shown in its complete form. You may find your number shown as a series of Xs (XXX-XX-XXXX). This is for your protection and safety.

Next you should find your current address followed by a listing of previous addresses. Be sure all the addresses shown correspond to addresses that you have had. The next section lists your employment history. Check to be sure the information accurately reflects your employment. The listing of a job you never had could be an indication that someone else’s credit information has been merged with yours.

Second Step: Dig into the Dirt: Your Negatives

Hopefully you won’t have any negatives, but if you do, it will be in the Negatives section on the report. This section can include derogatory public records (if you filed for bankruptcy, owe money because of a court judgment, lost a house to foreclosure, had your wages garnished, or have a Federal tax lien on your record), collections (any time you don’t pay your bills on time and the creditor turns over your account for collections to a third party), and late payments or other problems.

Review all the information in the negative section very carefully for accuracy. If the information is correct, there isn’t much you can do but wait it out. The good news is that even the worst of the negative information will not have a major impact on your credit score when you are at least three years past whatever caused the negative mark. Most negative information will be completely removed from your credit report in seven years.

Third Step: Get a Handle on Credit Inquiries

This section will include information about lenders or other interested parties, such as a utility company, who have viewed your report. The first list of inquiries, which includes the date of contact and the company that requested your information, are the hard inquiries. These are inquiries by companies to whom you have applied to for credit.

Some reports will include a second list of socalled soft inquiries. These are companies that pulled your credit history either for marketing purposes or to review your credit activity if you already have an existing account. This list will include the creditor and date of inquiry.

In addition to the two inquiry lists you’ll also get detailed contact information for each company. If you see creditors with whom you are not familiar and to whom you never applied for credit, it is wise to contact them to find out why they checked your report.

Fourth Step: Examine Your Listed Accounts

The next section will be a listing of your accounts. At the top of this section is a summary and then detailed information about each account follows.

In the account detail section you’ll find: the account number, type of account (revolving, installment, overdraft/reserve checking, or mortgage); monthly payment terms; date opened; date of last activity; date paid out (date paid in full or charged off); date closed (if applicable); loan type; collateral (whether the account is guaranteed against an asset such as your home); description; and payment history.

Carefully review all the details about each account to be sure they are accurate.

Fifth Step: Fix Your Reports

Everyone faces problems with their credit reports at some time in their life. It can involve a charge that is incorrect on your credit card bill or a negative mark on that is not based on what really happened. These negatives can result in a “no” decision on an application for future credit, even if the negative mark is not a true reflection of your credit history.

The first step in the correction process is to send a written letter to the credit bureau listing any errors you found, what is wrong with the information on the credit report, and how you think the information should be corrected. For example, if your credit report shows that you have a past due account, but you are caught up on all your bills, you should indicate which accounts are paid in full and ask for the credit reporting agency to report the account as current.

Sixth Step: Dealing with the Credit Agencies

After you contact the credit reporting agencies regarding any problems in your credit report, the agency has 30 days to respond to your letter. In that 30-day period the agency will investigate your claims and contact the creditor that reported the information. If you have supporting data to prove your claims, send that along with your letter. In most cases the agency will believe the creditor unless you have solid proof the creditor is wrong.

When you get the response from the reporting agency, you may still disagree with what the creditor is reporting. In that case, you need to contact the creditor directly to correct any inaccuracies.

You have 60 days to correct the information from the time you receive a response from the credit reporting agency. During that period if you are not satisfied with the response, you can contact the credit reporting agency again and ask for an additional investigation.

Seventh Step: Keep Monitoring

I can’t emphasize enough how important it is for you to regularly monitor your credit report. At a very minimum you should request a copy of your report every six months. You not only need to review your report for accuracy, but you also want to find out if someone else might be using your identity.

If you see items on your credit report that you don’t recognize, quickly call the creditors involved and find out more detail about the accounts. The faster you stop someone from using your identity, the easier it will be to clean up the mess.

Do you want to protect information thieves? Check out this guide and learn how to protect Identity and Credit in the United States.