How To Repair Your Credit

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Don’t let anyone fool you into thinking you need to hire a professional to repair your credit. The truth is, there is nothing a credit repair company can do to improve your credit that you can’t do for yourself. So, save yourself some money and the hassle of finding a reputable company and repair your credit yourself.
Before you can start repairing your credit, you have to know what you need to repair. Your credit report will contain all the information you need to start repairing your credit. You’re entitled to free credit reports from each of the three credit bureaus each year. You can also order your credit reports directly from the credit bureaus for a fee.
Why should you order all three credit reports? Some of your creditors and lenders might report only to one of the credit bureaus. And, since credit bureaus don’t typically share information, it’s possible to have different information on each of your reports. Ordering all three reports will give you a complete view of your credit history.
Make an extra copy of each report in case you need to dispute information.
Read through your reports once you get them. Become familiar with the information contained in each. Using different color highlighters or pens, highlight what you need to repair:

* Incorrect information, including accounts that aren’t yours, payments that have been incorrectly reported late, etc.
* Past due accounts that are late, charged off, or have been sent to collections.
* Maxed out accounts that are over the credit limit.
You have the right to dispute any information in your credit report that isn’t correct. When you ordered your credit reports, they should have come with instructions for disputing credit report information. If not, you can send a letter to the credit bureau detailing the inaccurate information. It’s often helpful to send a copy of the report with incorrect information highlighted.
Since payment history makes up such a large part of your credit score, several past due accounts have a significantly negative effect on your score. Taking care of these is crucial to improving your credit score. Your goal is to have all your past due accounts being reported as “current” or “paid.”

* Get current on accounts that are past due, but not yet charged-off. Do what you can to keep accounts from getting charged off.
* Pay off charge-offs.
* Work with debt collectors to take care of your collection accounts.
Your credit utilization – your total debt compared to total credit – makes up 30% of your credit score. Having maxed out credit cards costs credit score points (not to mention costly over-the-limit fees). Bring maxed out credit cards below the credit limit, then continue working to pay the balances off completely.
After you’ve resolved the negative items on your credit report, work on getting positive information added. If you have some credit cards and loans being reported on time, good. Continue to keep those balances at a reasonable level and make your payments on time.

On the other hand, you might have to reestablish your credit by opening up a new account. Since past delinquencies can keep you from getting approved for a major credit card, only make one application. This will keep your credit inquiries low. If you get denied, try applying for a department store credit card. Still no luck? Consider getting a secured credit card.
* Salvage what you can. Don’t sacrifice accounts that are in good standing for accounts that are not. Continue making timely payments on all your current accounts.
* Get consumer credit counseling. If your debts are overwhelming, creditors aren’t willing to work with you, and you can’t seem to come up with a payment plan on your own, consumer credit counseling is an option for getting back on track.

By LaToya Irby, About.com