How to fix bad credit yourself and improve your credit score

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How to fix bad credit yourself and improve your credit score
2 years ago
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Bad credit can make securing a loan, renting an apartment, or even getting a job difficult. As the economy tightens and more job seekers strive for fewer jobs, employers increasingly rely on credit reports as a factor in their hiring decisions. Don't let bad credit ruin your opportunities--repairing bad credit is easier than you think.


Requesting your credit report
To repair bad credit, you must first request your credit report. The three consumer reporting agencies (Equifax, Experian, and TransUnion) are required by the Fair Credit Reporting Act to provide consumers with one free report a year. Since the agencies operate independently, their reports can contain different information. In order to most effectively clear bad credit, you must request reports from each of the companies.


Breaking down your credit report
Once you've received credit reports from each of the reporting agencies, it's time to break them down into categories. Repairing bad credit requires tackling the following areas: credit accounts that are maxed out; accounts that are past-due; and information that is false, out-of-date, or incorrect. When analyzing your credit report, carefully examine the negative items and place them in the proper categories.


Tackle maxed-out credit accounts
Credit cards that are maxed out or at their limits contribute to a poor credit score. When trying to repair bad credit, tackle maxed-out accounts first. Pay off any credit card you can, and set aside extra money each month for paying down the rest. Get them under their limits and continue paying until you've cleared your debts.


Get past-due accounts up-to-date
To clear bad credit from your credit report, you must catch up on past-due bills. Work with debt collectors to pay off accounts that have gone to collection, and get current on accounts that are behind. Once you've paid off old debts, ask the collection agency to remove the bad credit report from your record.


Fix old and incorrect information
Fixing inaccurate negative items is the most complicated step in repairing bad credit. But with a little effort and diligence, it doesn't have to be difficult.

The Fair Credit Reporting Act gives consumers the right to contest any incorrect information on their credit reports. That means that if information is false or out-of-date, you can have it removed or corrected.

To dispute a negative item, contact the consumer reporting agency. Send a letter that details which items you believe are false, and explain why you are contesting them. In order to prove your claim, it's important to include copies of any documents that support your case. Also consider including a copy of your actual credit report, with the items you're disputing circled or highlighted. Be sure to keep copies of everything, and to send your material by certified mail so that you have proof of its receipt.

In addition to clearing your report of inaccurate information, you should also remove items that are out-of-date. By law, consumer reporting companies cannot keep negative information on your report if it is past a certain time limit. This time limit varies by state and by type of debt. Check your local laws to be sure the disputed item is outdated.

United States law gives consumer reporting agencies thirty days to investigate any disputes. Unless your claim is deemed frivolous, you should receive, in writing, the results of the investigation, as well as a copy of your updated credit report.


Build new credit
Once you've managed to clear bad credit, it's time to start building a new, clean credit history. Instead of risking a negative report by being denied for a regular card, consider obtaining a secured credit card. A secured card is backed by a deposit or bank account. Use one responsibly and you'll have a positive credit history in no time.

Enjoy your improved credit score
It may seem difficult to repair bad credit, but the effort will be worth it the next time you apply for a loan, attempt to get a job, or try to buy a new house or car. With no poor credit history to weigh you down, you can be on your way to living the kind of life you deserve.

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