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Improving credit scores: Steps to get your credit back

By Ben Woolsey

Is your credit in disarray? Are you constantly looking at those ads on TV that promise to help you get back your credit? If so, there are there are a lot of companies that can help you repair and rebuild your credit, but there are many things you can do yourself.

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The first and foremost thing you must do is NOT run away from creditors. Don’t wait for them to call you or worse, don’t take their calls or return their messages. Contact them directly as soon as you realize that you are not going to be able to make payments to discuss your options. Most creditors are not as hard on you as you might think. They WANT you to pay them back and will usually work out a repayment plan that realistically fits your budget.

Working with your creditors is the best way to prevent the need for credit repair. Your credit score may drop slightly, but nearly as badly as people who ignore the problem. As long as you show a willingness to pay back a creditor and keep in contact with them, you may never get a blemish on your credit report. It's when you try to ignore your creditors that they report you to the credit bureaus.

However, it is human nature to avoid conflict. If you have avoided your creditors and are being denied credit you need to take steps to start rebuilding your credit.

If you are unsure about how to proceed with your credit repair, you can get some help from a credit counseling service. Such services can help you to work out a plan and a budget. There are also many other nonprofit groups that offer help. In addition, you can check with your employer, bank, credit union, or credit repair company to investigate options for no-cost or fee-based credit counseling programs.

Before you begin your credit repair, you should know your rights under the Fair Credit Reporting Act. These rights can help you to understand how to proceed.

First of all, you are entitled to a free copy of your credit history report once a year from each of the three major credit reporting agencies -- Experian, Equifax and TransUnion.

In addition, you may get a free copy if you've been denied credit, insurance, or employment. But you MUST ask for it within 60 days of that denial. You can also get a free copy if you can prove you are:

  • Unemployed and plan to look for a job in 70 days
  • On welfare
  • A victim of identity theft or fraud

Obtaining a copy of your credit report is the first step in credit repair.

Getting rid of false information
If you are denied credit, insurance, or employment because of inaccurate or incomplete credit information, then the company has to give you the name and address of the reporting bureau. If there is inaccurate or simply wrong information about credit card or other loan repayments on your credit report, then you can dispute it with the credit bureau to get it corrected. This is free to do this, but you will need to prove why the information is false. Getting this inaccurate information off your report will help your credit repair. 

Here are some final facts that will help you to better understand how credit works and what you can and can’t change when you engage in credit repair:

  • A bankruptcy can stay on your credit report for 10 years
  • Lawsuits or judgments against you can be reported for 7 years or until the statute of limitations runs out (whichever is longer).
  • There is no time limit on information reported because of an application for a job with a $75,000 or more salary.
  • There is no time limit on information reported because of an application for more than $150,000 worth of life insurance
  • Applying for a lot of credit at once (e.g. multiple credit cards with multiple credit card issuers) will cause your credit score to go down.

Taking the steps to repair and rebuild your credit is the best way to ensure you can enjoy the benefits and advantages of having a credit card.  Remember, your credit card is a privilege not a right.  Be responsible when using it.

To comment on this story, write Editors@CreditCards.com.

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See related: Help for bad credit

Published: May 17, 2006


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