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How to Repair Your Credit

How to Repair Your Credit

You may have across situations wherein you may have found discrepancies in your credit report. Due to incorrect data reporting, you may end up with a low credit score and an impacted credit history. Having a lesser than recommended credit score, due to no fault on your part can lead to being turned down for credit or being given one at a relatively high interest rate.  That is why it is important to ensure that there are no errors or discrepancies in your credit report.  But if they are already there, how can one get rid of them?

The credit repair process involves three simple steps

  1. Finding out mistakes in your credit report.
  2. Contacting the credit bureaus and filing a dispute for the stated mistakes.
  3. Getting errors removed or corrected from your credit report

  Here are steps to get your credit repair process in order.

  1. Get your free credit reports - As per the norms of FCRA (Fair Credit Reporting Act), one is entitled to get a free credit report from three major credit bureau, viz; Equifax, Experian and TransUnion, once in a year. You can go the federal government approved, to get credit reports online. You can also call 1-877-322-8228 and get the credit report(s) by mail in a matter of 15 days. Please be known that you may have to through a relevant verification process, before the credit report is made available to you.
  2. Go through your credit report and look out for errors - Here are things that you should look for
  • Incorrect personal information and misspellings in your name.
  • One-time payments that are reported as late.
  • The same charge or debt appearing twice in the report.
  • Closed accounts shown as open or incorrectly written as ‘closed by grantor’.
  • Bankruptcy information that is more than ten years old, still showing up on your report.
  • Credit information that is more than 7 years old, showing up on your credit report.
  • Unapproved or false inquiry information.
  • Wrong information about your credit limit.
  • Accounts that are not associated with you, attributed as belonging to you.
  1. Dispute errors and discrepancies with credit bureaus - You can send a formal dispute letter to the credit bureaus notifying them about the error(s). The letters should include the following bits of information –
  • The copy of the credit reports with errors displayed in the form of annotations, for example, red circles around suspected bits of information.
  • A written explanation of the error and the outcome you need, like correction or removal of inaccurate data.
  • Copies of proofs, documents and other data that show that the information reported in the credit report was wrong.  You don’t need to send originals as proofs.
  • Your contact information.

Once the credit bureau gets your letter, an investigation is set into motion and you can expect a written reply within 30 to 45 days.  The credit bureau can either correct or remove the incorrect information or confirm that that the information is correct with sufficient proof.

 Apart from the above 3 steps, you should also do two things – dispute these inaccuracies with your creditor or lender; and focus on building your own credit.

The reason you should dispute the information with the original creditor is because they are the ones who provided the data to the credit bureau.  So, if you don’t give them the correct information, they may again resubmit erroneous information to the credit bureaus.  The steps are the same as disputing incorrect data with the credit bureau.

It can take 6 months or even more for the change to reflect in your credit report, your score can also take additional time to change for the better. That is why you should focus on building your credit through disciplined financial practices like making timely payments on your credit cards, budgeting your finances properly and ensuring that you don’t max out your credit cards.

Prevention is better than cure, it makes more pragmatic sense to regularly review your credit reports to weed out any errors.

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