Fixing Your Credit Report

Sometimes, negative things appear on your credit report.  Usually, they do a good job of maintaining

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Credit card

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accuracy, but mistakes do happen. The creditor or the reporting agency may screw up, or you may have your identity stolen.  If either of these situations are true, you’ll want to correct your credit report, making yourself eligible for lower rates on future credit and, occasionally, lowering the cost of things like auto insurance.

If you throw “credit repair” into Google, you get 18 million hits.   Most of those are either outright scams or hopelessly optimistic about what they can accomplish. As I said once before:

Credit Repair is almost always a scam. There are ways to get correct bad information removed from your credit report.  If the information is correct, those methods are illegal.   There are two legal methods to repair your credit.  First, stop generating bad credit.  Make your payments on time and eventually, the bad items will fall off.   Second, write letters disputing the actual incorrect items on your credit report.  There are no quick fixes, and anybody telling you different is flirting with a jail sentence, possibly yours.

There are ways to avoid the scammers.

  • Avoid advance-fee credit repair. If they are any good, you will pay for results, not intentions.  If they charge beforehand, they are already breaking the law.
  • If they insist they can erase the accurate, but negative information, run away.
  • If they tell you to dispute everything negative, even the accurate information, run away.
  • If they tell you to create a new credit identity, don’t just run, report them.  It’s a felony.

Legally, you cannot get valid information removed from your credit report.  Anyone who tells you differently is advocating a crime. However, according to the Fair Credit Reporting Act (FCRA), you are entitled dispute incorrect records.

To verify the accuracy of your credit report, you need to see it.  You can get a free report if your credit is used to deny you for something.  This is known as an “adverse action” .  You have 60 days from the denial to request the report.  You can also get one free report from each of the major credit bureaus each year. I space out these requests so I see my credit report every 4 months.

If there is inaccurate information on your report, dispute it in writing.  Send a letter to the credit bureau that is reporting the error.  Explain the problem and politely demand an investigation.   They will contact the creditor, who usually has 30 days to respond.   In the meantime, send a dispute letter to the creditor, along with proof of the inaccuracy.  If the investigation does not go your way, the creditor will have to report the dispute status to the credit bureaus in the future.

If the negative items are accurate, there is only one way to get it off of your report legally:  Wait.    Most negative information can only be reported for 7 years, while a bankruptcy will be reported for 10.

Another way to build your credit in the face of negative credit is to start building good credit to overshadow the bad. Get a credit card.  Your first credit card from the bottom of the debt-barrel will probably be a gas card or a store-branded credit card.    That’s fine.  The main consideration is are low or nonexistent fees.   Don’t accept application fees, activation fees, fees for carrying a balance or fees for not carrying a balance.    Annual fees are becoming a fact of life, so look for low fees.   The interest rate does not matter.   You will be paying this card off immediately, meaning no less often that every two weeks.  Make sure every penny is paid during the grace period, and make sure your card comes with a grace period.   Some don’t.  Those are bad cards to get.

There are no quick fixes for bad credit, just good new habits and time.

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