What does credit repair mean?
Credit repair means fixing your credit. You may have bad credit due to some financial events in your life or due to errors in your credit report. You may be a victim of identity theft and that may have affected your credit report as well. Having a bad credit can have a lot of disadvantages.
You may get rejected for a loan, your credit card application might be turned down, or you may be paying higher-than-average interest on your loans.
This can mean high financial costs and in some cases, personal embarrassment as well because finding out about your bad credit via a rejected loan application tends to happen at the most unexpected of instances. Such a nasty surprise when you least expect it can be quite uncomfortable.
How does bad credit repair work?
Credit repair is the process through which a consumer can improve his/her bad credit. The first thing that needs to be done is order a copy of the credit report. There are 3 major credit bureaus which create and maintain these credit reports.
They are Equifax, TransUnion, and Experian. Most lenders and financial institutions use reports from these agencies to evaluate your credit profile. It is important to order reports from all three of these bureaus because each one compiles the report in their own way and an item on one bureau’s report may not show up on another bureau’s report.
What to look for in your credit report?
Once the reports are on hand, the next step is to go through each item. If you find any item which is incorrect or not accurate, then make a list of such items and dispute it with the credit bureau.
By law, the bureau is required to give you proof as to why that item is on the credit report. You do not need to send any documentation as the burden of proof is on the credit bureau. While the law requires credit bureaus to comply with your request to look into a dispute, make sure you are not making frivolous requests.
If you do so, then the credit bureau is well within its right to not entertain you. If you do not understand the items on your credit report or are unsure how to dispute them, then you may need to team up with a credit repair company that can help you rectify negative items on your credit report.
Why identity theft affects your credit?
Besides errors and inaccuracies in reporting of your credit, it may be also possible that you have been a victim of identity theft. In such cases, your credit may get affected because an account was fraudulently opened in your name and payments may be outstanding on that account. Such an unfortunate situation may also require credit repairing, and finding a reputed company to work with can help you in those circumstances.
Basic credit repair guidelines
Besides the above scenarios, it may also be possible that you have faced a financial challenge in your life, like a foreclosure or bankruptcy. Such events will negatively hit your creditworthiness.
Fixing your credit due to such financial challenges can be a long process, often running up to 10 years. However, it is possible to come out of such a mess if you follow basic credit repair guidelines. Some things that you can do to improve your credit and pull up your credit score are as follows:
- Control your spending. Cut out expenses which are not core and absolutely necessary. Once your credit is fixed, you can resume those discretionary purchases.
- Stay significantly below your credit card limit, as being too close to the limit negatively impacts credit.
- If staying below limit is not possible, then increase the limit of your credit card, as you do not want to be close to the limit.
- Consolidating your smaller debts into one bigger debt with one interest payment is better for your credit profile. You might even save money because the consolidated loan may have a lower interest outgo than different debts with varying interest rates.
- Try to get a credit builder loan. Smaller banks and credit unions tend to offer such loans which can really help pull up your credit score.
- If you are disputing negative items on your credit report, then write a professional letter to the bureau. Clearly state your personal information such as name and contact information. Then list out all the items which you think are not correct. You do not have to give detailed reasoning or proof, but basic reasoning on why you think the items are not correct should be mentioned in your letter. Hand-write the letter and mail it with the return receipt option. It will create proof of correspondence in case you end up in court.
- Pay off loans which you can. The lesser debt you have on your books, then better it is for your credit. If you do pay off a loan, then make sure you get a written confirmation of the same, as it is important for you to have proof of your repayment.
Easy credit repairing
Remember that you can do the credit repairing activity yourself. It is not necessary to hire a credit repair service company to do the work for you. You can look up what the various items on a credit report mean, how they can be fixed, and so on.
You can also get sample formats of letters which you need to write to credit bureaus. Basically, everything that a credit repair company can do legally can also be done by you. However, the question then is, do you have the time and motivation to do it all? Are you willing to spend time and effort learning about credit reports, fixing of items, etc.
Or are you comfortable paying a fee to a credit repair company and letting them repair your credit and represent you in front of creditors and lenders? Ultimately those question will decide what approach you choose.
Green touch has a track record of success in repairing credit for its customers. With an expert team and continuous support, Green Touch can help you fix your bad credit. Call us or fill out the form below for further discussion.