Credit Repair Chapter 3 (2024)

Credit Repair Chapter 3 (1)
If you're one of the 68 million score-able Americans with a bad or poor creditscore—lower than 601—you've probably wondered if removing negative itemscan help your standing.

You don't need a credit card andit won't impact your credit score

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  1. Chapter 1: What Is Credit Repair?
  2. Chapter 2: What Are Credit Repair Services?
  3. Chapter 3: What Is DIY Credit Repair?
  4. Chapter 4: How to Improve Your Score Beyond Credit Repair

What Is DIY Credit Repair?

DIY Credit Repair is fixing your credit on your own by contacting credit bureaus and creditors yourself to dispute and challenge inaccurate items. You can do this entirely on your own or in conjunction with using a credit repair service for certain items while handling others yourself.

Whether you repair your own credit or work with a credit repair company, the steps for repairing credit are basically the same. Below is at DIY credit repair, how to do it and why it might be good for you. Keep in mind that not all the tips in this article may be relevant to your specific situation.

In This Piece

  • Can You Fix Credit Yourself?
  • The Credit Repair Organizations Act
  • How Can I Repair Credit Myself?
  • Dealing with Negative Information on Your Credit Report
  • How Long does Negative Information Stay on Your Credit Report?
  • Can You Remove Negative Information from Your Credit Report?
  • When Should You DIY Credit Repair?
  • How Long Does It Take to Repair Your Credit?
  • What Is the Fastest Way to Repair My Credit?
  • How Else Can You Get Credit Repair Help?

If you’re wondering if you can fix credit yourself, the answer is yes, DIY credit repair is possible. In fact, everything a credit repair company can do, you can do yourself. Credit repair does take time and requires multiple steps, but as long as you have the commitment and time, you can repair your own credit.

Working with a credit repair company could be beneficial if you have several errors on your credit report or lack the time to handle the credit repair steps yourself. If you believe you’re the victim of identity theft, you may need to contact an attorney to help you work through the process of repairing your credit.

The Credit Repair Organizations Act

If you do choose to work with a credit repair company or law firm, it’s important to understand your rights. The Credit Repair Organizations Act (CROA) protects your rights.

First, it forbids these credit repair companies from requesting advance payment for services. Secondly, it requires them to provide you with a written contract explaining exactly what services it provides. Finally, it gives you the right to break this contract under certain circ*mstances. Be sure that any company you work with abides by these rules.

Whether you fix your credit on your own or work with a credit repair service, the process of fixing and improving your credit involves similar steps. Essentially, they involve getting your credit report and systematically fixing inaccurate items that are lowering your credit score.

1. Request Credit Report

The first step to repairing your credit is to request a copy of your credit reports. All three major credit reporting agencies—TransUnion, Equifax and Experian—allow you to request one free report every year. You can obtain these reports for free through AnnualCreditReport.com.

2. Review Reports Carefully

Once you receive your credit reports, be sure to check them over very carefully. Start by making sure all your personal information is correct, including your name and address. Then, make sure all account information is also correct. Search for errors, such as:

3. Dispute Any Incorrect Information

If any information on your credit report is incorrect, it’s crucial to take steps to dispute these errors. You can dispute any credit report errors by submitting a credit dispute letter to the corresponding credit reporting agency using the addresses below or by contacting them by phone.

Experian

P.O. Box 4500

Allen, TX 75013

(800) 916-8800

https://www.experian.com/blogs/ask-experian/credit-education/faqs/how-to-dispute-credit-report-information/

Equifax Information Services LLC

P.O. Box 740256

Atlanta, GA 30374-0256

(866) 349-5191

https://www.equifax.com/personal/credit-report-services/credit-dispute/

TransUnion Consumer Solutions

P.O. Box 2000

Chester, PA 19016-2000

800-916-8800

https://www.transunion.com/credit-disputes/dispute-your-credit

You should also contact the creditor or lender involved in the dispute. They may be able to correct an item for you. The correction may take 30 to 45 days or more to appear in your updated credit report.

4. Pay Bills on Time

Your payment history accounts for 35% of your overall credit score. Any late payments listed on your account will negatively impact your credit score. To avoid future late payments, consider setting up automatic payments. This step can make sure your regular payments are made on time.

5. Pay Off Delinquent Balances

If you have any past due or delinquent balances on your credit report, try to pay them off as quickly as possible. The longer these delinquent accounts remain on your credit report, the more damage they can cause.

You can also reach out to your creditors and see if you can work out a payment arrangement. You may even be able to enter a “pay for delete” agreement. With this agreement, your creditor agrees to report your account as paid in full and you agree to pay a set amount, which is often lower than your actual balance.

While a “pay for delete” agreement won’t remove the account from your credit report, it will mark it as paid. Before entering into this type of agreement, be sure to get everything in writing.

6. Decrease Your Credit Utilization, and Pay Down Your Debt

High balances are another major item that can drag your credit score down and paying them down can be a route to improving your score. High balances result in a high credit utilization ratio which means the amount of debt you have in comparison to the total amount of debt you have available. It’s recommended to keep your credit utilization ratio lower than 30%.

When paying down balances, be strategic. Consider how much cash you can afford to put toward paying down debt without disrupting your budget. A general rule of thumb is not to allocate more than 20% of your monthly income toward debt repayments so that you still have enough left over for other bills and expenses. However, this may vary with your situation.

Also, consider which balances you should pay down first. Paying down balances with high-interest rates can save you money in the long term (debt avalanche method). Alternately, you may elect to pay off cards with low balances so that you can see your progress and get a sense of momentum (debt snowball method).

7. Open Different Types of Accounts

Having a mixture of credit accounts, such as credit cards and bank loans, can also improve your credit score. Once you start improving your credit score, you can begin opening different types of accounts.

One such account could be a secured card or loan. These lines of credit can help diversify your credit mix and show you’re capable of good credit management. Consider talking to your bank about whether they have any credit builder options for someone in your situation.

However, avoid the temptation to use your improved credit to apply for an excessive number of new accounts, which can hurt your score. Instead, be selective about which types of credit you apply for, and open new accounts gradually.

8. Keep Accounts Open

If you have poor credit, you may be tempted to shut down all your credit accounts. This could be a mistake. Instead, evaluate your accounts and keep as many open as possible. This step can actually improve your credit because 15% of your credit score is based on the age of your credit and account history.

Once you open an account, don’t close it unless there is some compelling reason. However, if you’re not using an account actively, be sure to keep an eye on it periodically to make sure you’re not being billed any fees in the fine print.

9. Request a Credit Limit Increase

Another way to decrease your credit utilization ratio is to request an increase in your credit card limit. Once your credit score starts to rise, you may qualify for this type of increase in credit.

10. Consider Debt Consolidation

If your debt is overwhelming and you have multiple accounts with high balances, you may want to consider debt consolidation. This method allows you to merge multiple outstanding debt obligations into a single monthly payment. There are two ways you can make this happen.

First, if your credit is high enough, you can use a credit card with a 0% balance transfer option. This method allows you to use your credit card to pay off your debt and then slowly pay it back with monthly payments. Keep in mind that some credit card 0% interest offers are only good for a set time. Once this period is over, your balance will be subject to the credit card’s regular interest rates.

The second option is to use a fixed-rate debt consolidation loan. It’s important to compare your options and speak with a financial advisor to determine which option is right for your specific situation.

Dealing with Negative Information on Your Credit Report

If you have negative information on your credit report, how do you deal with it? To understand your options, you first should understand how long different types of negative information stay on your report. You then can address how and if you are able to request the removal of the negative information.

Credit report information is classified as either “positive” or “negative.” Positive information includes items such as bills paid on time. Negative information includes items such as late payments, third-party collection actions, loan defaults, bankruptcies, and foreclosures.

In general, negative items remain on your report for seven years. However, this varies with different types of negative items:

  • Late payments remain for seven years after the original delinquency date
  • For accounts that the creditor has written off as a loss (charge-offs) or has referred to a collection agency, negative information remains for seven years after the initial missed payment
  • For bankruptcies, negative information can remain on your report for 7 to 10 years, depending on the type of bankruptcy
  • Other negative accounts, such as repossessions, can remain up to seven years from the first missed payment
  • Closed accounts which have been paid as agreed can stay on your report up to 10 years after the account was reported by the creditor
  • Open accounts paid as agreed remain as long as the account is open and the creditor continues reporting it

In addition, hard inquiries into your credit score can remain on your report for up to two years.

Can You Remove Negative Information from Your Credit Report?

You can’t remove negative information from your report, you can request that the credit bureaus or your creditors remove inaccurate negative information. You can’t remove negative information which is accurate and has not been on your report long enough to qualify for automatic removal. However, you can request the removal of some types of negative information:

  • The information that has been on your report long enough that it should have been automatically removed
  • The information that appears multiple times
  • Negative items that result from identity theft

For items that have been turned over to a collection agency, you may be able to negotiate a pay for delete arrangement with the agency to accept a payment of your debt in return for reporting your account as paid in full. This will not remove the delinquency from your report, but it may reduce its impact and make financial providers see you as less of a credit risk.

Fixing credit on your own is an option. And any ethical credit repair company will tell you that. It might be the best option for you if you don’t have the money to pay for professional help and you have the time to dedicate to repairing credit on your own.

When trying to fix your credit, be clear and concise in your disputes with the three major credit bureaus. And get your documentation in order. You can mail a dispute letter or you can submit it online at each of the credit reporting agencies’ respective websites.

Remember that you need to dispute each error with each bureau. No bureau will clean up your credit report with its competitors!

If you decide to hire a credit repair company or a law firm, such as Lexington Law Firm, to help repair your credit, make sure you’re working with a reputable and ethical company.

How Long Does It Take to Repair Your Credit?

The time it takes to repair your credit depends on several factors, such as the amount of your debt, the severity of your credit report issues and your current credit score. For instance, if you have a poor credit score, it could take a longer time to repair your credit than if your score is in the fair range.

The time it takes to repair your credit score also depends on what steps you need to take. For example, paying off some of your debt may repair your credit score almost immediately.

Keep in mind, however, that creditors don’t typically report payments on a daily basis. Instead, creditors tend to only report to the various credit reporting agencies periodically, such as on a monthly or bimonthly basis. Additionally, it could take the reporting agencies another 30 days to post these payments to your credit report.

When filing a dispute with one of the credit bureaus, they generally have 30 days to investigate your claim and another five days to notify you about the results.

Some of the fastest ways to repair your credit include:

  • Disputing inaccurate items on your credit report
  • Negotiating payments with collection agencies
  • Setting up automated payments to make sure your bills are paid on time
  • Paying down balances
  • Consolidating your debt
  • Applying successfully for higher credit limits
  • Getting a secured credit card

Not all these strategies will be effective for all debtors. Consult a professional advisor for recommendations on your specific situation.

How Else Can You Get Credit Repair Help?

Using credit repair companies and doing it yourself aren’t your only resources for fixing your credit. Some other places you can get credit repair tips and assistance include:

  • The National Foundation for Credit Counseling (NFCC)
  • The Federal Trade Commission (FTC)
  • The Consumer Financial Protection Bureau (CFPB)
  • The Better Business Bureau (BBB)
  • Debt consolidation providers

If you need more help with your credit, you may wish to consider getting advice from a professional financial advisor or credit counselor. Your bank’s loan department may be able to assist you. The National Foundation for Credit Counseling can connect you with certified credit counselors. CreditRepair.com and Lexington Law Firm are available to review your credit report and help you work to remove inaccurate, unfair, or unsubstantiated items.

Affiliation disclosure: John C. Heath, Attorney at Law, PC, dba Lexington Law Firm contracts with Progrexion Holdings, the owner of Credit.com, to provide administrative and business support. Credit.com may receive compensation if a subscriber signs up for Lexington Law Firm services.

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