Credit Repair Made Easy
By Rick Miller
In recent years, more people than ever before have found themselves deeply in
debt with no remedy in sight. For many of those people, filing bankruptcy seems
the only answer. In the majority of cases, however, this is not the case. With
some careful planning, skilled help and patience, people can repair their
The first step toward repairing credit is to find out exactly what is owed
and to whom. Current copies of credit reports should be obtained from all the
major credit bureaus. Free copies of these reports are available if credit has
been denied recently, usually within thirty to sixty days. If any inaccurate
information is shown on any of the reports, this information should be disputed.
This action may be initiated by telephone but it is better to do this in writing
for documentation. Credit bureaus must investigate disputes promptly, normally
within thirty days. If this time passes and no correspondence or other
communication is received, the credit bureau should be contacted again, both by
telephone and in writing.
Often credit bureaus will update files and not notify the individual. If
this has happened, request a copy of the updated report. Credit bureaus usually
furnish free updated copies. Be persistent until the inaccurate information is
removed. It may have a great bearing on future creditworthiness.
After incorrect information has been removed, repeat the process with each
credit bureau that carries the inaccurate information. This is necessary since
the credit bureaus operate independently and changing records with one will have
no bearing on the files at another bureau.
Here are some of the most disputed credit report items:
---outdated information, usually over seven years old
---inaccurate personal information
---credit information that belongs to someone else (This is quite common.)
If a large number of credit inquiries appear in the file, request that the
credit bureau merge multiple inquiries from the same source. This will help
future credit ratings since an excessive number of inquiries is seen as
Always keep credit information current by obtaining copies of credit records
at least once yearly after resolving problems. This will also act as an alert to
any credit fraud that may be occurring.
After obtaining a credit file and starting the dispute process, evaluate
your financial situation. If you find that you are unable to make at least the
minimum payment on outstanding accounts, immediately contact creditors. Many
will appreciate your willingness to pay and will attempt to help set up plans
for payment. Do not make promises which cannot be kept. A small payment is
preferable to a large payment that never arrives. Sometimes this contact can be
enough to reduce payments and forestall more severe measures. If not, a more
serious step must be taken.
This next step is to consult a credit-counseling agency. These organizations
are invaluable in solving financial problems. They are staffed with trained
individuals experienced in the credit field. Do not confuse these agencies with
the commercial "credit repair" companies who claim that, for a fee, they will
wipe your credit slate clean. Don't be fooled. There is no legal way to do this.
Any procedures they might use are available to you free of charge.
A counselor at a credit counseling agency will take all the information
concerning your financial situation, evaluate it and decide the best strategy to
use in solving your problem. You will be asked to abide by certain rules while
receiving services. These rules may include closing charge accounts and
canceling credit cards or paying your bills through the agency. It is to your
advantage to abide by the rules, as these agencies are perfectly safe. They are
non-profit and will not ask you to pay for their services. Although the
repayment period may be long, do not accept offers of credit while receiving
services from these organizations since this will only delay the process and
could possibly result in you being refused further services.
Here are some suggestions for maintaining good credit after the credit
repair period is over:
---Live within your means. Do not return to the bad financial habits that
resulted in credit problems the first time.
---Create a budget. Know where all your money is going. Small purchases can
add up and make it difficult to meet important obligations. Keep records of all
money spent for one month. This detailed record will show where spending cuts
need to be made. It will also alert you to any spending problems.
---Plan for financial emergencies by depositing a fixed amount of income to
a special "emergency" account. Do this as if paying another monthly bill. This
money will insure that emergencies such as illness or loss of job do not catch
you totally unprepared. Try to accumulate enough in the fund to pay bills for at
least six months.
Rick Miller is an ex-credit bureau manager with 10 years