Repair Your Credit Yourself: Credit Repair Tips
Credit Report Basics
Get a Copy of Your Credit Report
Fix Errors and Mistakes
Start Rebuilding Credit
Other Resources
Credit Report Basics
Credit bureaus compile credit reports. The three major credit bureaus are Equifax, Experian, and TransUnion. These are private companies that collect information about consumers' credit history and sell it to businesses that are allowed to see your credit report. These businesses can include banks, mortgage lenders, credit card companies, insurance companies, and employers.
Credit bureaus get most of their data from:
- creditors
- court records (lawsuits, judgments, bankruptcy filings)
- county records (legal claims)
A credit report includes:
- names of creditors
- type and number of each account
- when each account was opened
- your payment history
- your credit limit or the original amount of a loan
- your current balance
The fact that an account has been turned over to a collection agency or is in dispute also appears on the report.
Apart from financial data, your credit report also contains noncredit data. Current and former names, past and present addresses, Social Security number, employment history, and even marriages and divorces.
Get a Copy of Your Credit Report
You can get a free copy of your report once a year, from each of the three major credit bureaus. To order your free report, call 877-322-8228 or click here.
If you fulfil any of the following conditions, you can get an additional free copy of your credit report each year:
- you've been denied credit because of information in your credit report
- you're unemployed and looking for work
- you receive public assistance
- you believe your file contains errors due to fraud or identity theft, or
- you've been denied employment based in whole or in part on information contained in the report
Fix Errors and Mistakes
After you get your credit report, you should look for any inaccuracies or mistakes in the credit and noncredit data. For more details on how to remove these errors from your report, see How to Clean Up Your Credit Report.
Start Rebuilding Credit
You can repair your credit yourself or hire someone to do it for you.
- Clean Your Credit Report: Start off by cleaning up your credit report i.e. remove any inaccurate information and mistakes.
- Add Positive Information: Now start adding positive information to your record. If accounts that you pay on time are missing from the report, send the credit bureaus a recent account statement and evidence of your payment history and request that these be added to your report. Since creditors like to see stability, you can also ask the bureaus to add the following information to your report if it isn't already there: your current employment, your previous employment, your current residence, your telephone number, your date of birth, and your checking account number. Even though the credit bureau isn't obliged to add this information, but they often do.
- Use Credit Cards: Creditors like to see evidence in your credit report that you have a history of paying off credit on time. Use your credit card every month. It will help if you make small purchases regularly and pay them off completely in time.
- Apply for a Credit Card: If you do not have a credit card, it will help if you apply for a credit card. You may be rejected if you have a bad credit history so try a secured credit card. You could also ask a friend or family member to cosign your loan or credit card application. Ideally, you should carry one or two bank credit cards, maybe one department store card, and one gasoline card. Creditors want to see that you can handle more than one credit account at a time.
- Make ALL Payments On Time: Start making all your payments on time. This includes cellphone bills, credit card bills, utility bills, and mortgage payments. Never pay a bill late and you'll be on your way to repairing your bad credit. Lenders give more weight to recent payments, so start by showing that you are less of a credit risk now.
It usually takes about two years to rebuild your credit so that you won't be turned down for a major credit card or loan. After four years or so, you should be able to qualify for a mortgage.
Other Resources
- http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm
- http://www.fdic.gov/consumers/consumer/ccc/repair.html
- http://www.fraud.org/tips/internet/creditrepair.htm
- http://credit.about.com/od/creditrepair/Credit_Repair.htm