T
he main goal in fixing your credit report should be to remove negative information. Any and all negative information affects your credit score and your ability to secure new credit.
Bad credit affects your good name and your name is involved in all areas of everyday life.
Fixing your credit report must involve as many strategies as necessary and a comprehensive plan of attack.
Disputing bad credit is a common strategy used by consumers but there are other ways to repair your credit. Below are seven useful strategies to fix your credit report:
1. Rehabilitate Past-Due Accounts
If you are past due on a credit card or loan some lenders will allow you to rehabilitate your account. Rehabilitation is a process by which lenders erase negative marks from your credit reports once a series of on-time payments have been made consecutively.
Usually lenders require at least 6 to 9 consecutive on-time payments in order for the negative marks to be deleted. Rehabilitation is not something lenders generally offer. You will have to request it.
A supervisor or manager may have to be involved in order to get account rehabilitation. Be persistent because many lenders will work with you, especially during this economic downturn. Remember to always negotiate a better credit rating in the rehabilitation process. You want the negative past due marks deleted once the rehabilitation process has been successfully completed.
2. Dispute Negative Information
Credit bureaus handle millions of credit files and even more pieces of information daily. Inaccurate reporting, mistakes and errors occur all too often. In order to fix your credit report dispute all negative information including duplicate account reporting, incorrect balances, negative payment history, derogatory accounts and reporting errors.
Learn how to dispute specific information in your credit report. Getting negative information removed will give your credit score a good boost and improve your credit history.
3. Keep Balances within Thirty Percent of Credit Limit
Do not use over thirty percent (30%) of your available credit. Keep those balances low and your credit scores will increase. Definitely do not go over your credit limit. This hurts your credit score tremendously. If you have some extra cash on hand pay down your credit card balances, even if it’s a small one, to 30% or less of your available credit limit.
In the alternative, if you do not have the cash on hand to pay down your credit card account, request a credit line increase but don’t spend it! Many credit card issuers can increase your limit without running a credit report if your account has been in good standing. Make sure you ask if a credit report will be pulled before requesting the credit line increase if you do not want to create hard credit inquiries.
4. Attack Collection Agency Accounts
Take a look at your credit reports and analyze collection accounts. First, determine whether the collection account belongs to you, is outdated (over 7 years old), a duplicate account, or even previously paid. As the junk debt buying industry grows, collection accounts should be under close scrutiny. Collection accounts are often sold from one collection agency to another.
Every collection agency involved could be listed in your credit files. This is incorrect and must be disputed. Zombie debt is also a growing problem. It involves older debt, often past the statute of limitations, being resurrected by a collection agency. There are horror stories where consumers have been harassed by collection agencies about closed, charged-off, paid in full or settled credit card debt over 15 or 20 years old. Learn more about Zombie Debt.
5. Get a Bank Loan Secured by a Savings Account
Bank loans weigh heavily on credit reports. A bank loan will help you rebuild credit. A secured bank loan will have the same positive effect on your credit scores as an unsecured bank loan, as long as it reports to all three major credit reporting agencies and paid on time. A proven strategy that has been around for a while is piggybacking secured loans where you open more than one secured bank loan.
Opening a secured bank loan does not require excellent credit because it is secured by money on deposit. That money will be earning interest in a savings or certificate of deposit account. Secured loan limits can range from $500 to $10,000. It simply depends on how much you are able to put on deposit. You must have enough in your monthly budget to maintain timely payments as the funds you deposit will be on hold until the loan is paid in full. Learn more about Secured Loans.
6. Settle Collection Debts and Get a Deletion
Once an account is purchased by a collection agency, it can often be settled for pennies on the dollar, especially older collection accounts. If you decide to deal with a collection agency never pay what they are requesting, which often includes inflated fees and interests. But more importantly, if you choose to settle a debt with a collection agency, get that entry entirely deleted from your credit reports.
There is no incentive to pay a collection agency without getting that negative entry deleted. Paid collection entries hold the same negative weight as unpaid collection entries because it is the negative collection entry that decreases your credit score. Negotiate a pay for deletion if you choose to settle a collection agency debt. Learn how to negotiate settlement and about pay for deletion.
