4 Steps to Repair Your Credit
However, sometimes things happen, and your credit score takes a hit. These events could be the result of identity theft, missed payments from difficult times, or just not understanding how credit and loans work. No matter what’s caused damage to your credit score, there are things you can do to repair it. While many people choose to hire a credit repair company to help them with these steps, you’re able to achieve an improved credit score doing them yourself, the choice on whether to hire an agency for help is up to you.
The first and most important thing you can do to improve your credit score is pay your bills on time. A record of on-time payments is one of the biggest things you can do to max out your score. Remember, a credit score is a numerical representation of how likely you are to pay your obligations on time. Therefore, a history of paying things on time will go a long way towards boosting your score.
However, there are times where you may miss one or several payments. This doesn’t mean that your credit is doomed forever. There are things you can do to help improve your score. The first option is simply to resume making on-time payments and wait. Late or missed payments stay on your credit report for seven years. After that, they “fall off” your report and your score improves as a result. However, there are other steps available to those who can’t or don’t want to wait seven years for improved credit.
The next technique for improving your credit is the verification request. When you request verification, you’re asking the credit reporting agency to check with a party that entered information on your credit report and to verify it’s accurate. A verification can be a powerful tool for removing harmful and inaccurate material from your credit report because the law says that if something cannot be proven 100% accurate then it must be removed from a credit report.
As a result of this law, you can ask for verification on all the negative entries on your credit report. If the company in question can’t prove that their entry is accurate, then it has to be removed. This can result in a serious boost to your score. This is especially important in cases of identity theft, as the company must prove that you were the one that incurred the debt to keep the entry on your credit report.
The next option for repairing your credit is file disputes. Unlike verification requests, which ask a credit reporting agency to get proof for a piece of information on your report, a dispute claims that the information is not accurate. Usually the person filing the dispute will have evidence to back up their claims. People who experience identity theft can take the most advantage of this credit repair mechanism. However, it’s important to note that credit records are maintained by humans, and humans make mistakes. Studies estimate that a surprisingly high number of credit reports have information on them that is mistaken. These mistakes can run the gambit from little things like a previous address, all the way to huge things like accounts and debts that you never took on. A successful dispute can thus dramatically boost your credit score.
Letters of Goodwill
The final option for people to repair their credit is known as a letter of goodwill. This credit repair mechanism works by using your recent good performance with your creditors and lenders to convince them to remove negative and harmful information from your report. For example, if you fell behind on a credit card bill three years ago, but have been paying on time, or even making extra payments since then, you are a good candidate for this type of credit repair strategy.
In a letter of goodwill, you essentially ask your creditor or lender to remove negative information they’ve entered on your credit report. You point out that your recent record demonstrates that the information no longer accurately reflects who you are as a consumer. The creditor or lender then has the option to consider your argument and act on it if your accounts are in good standing and you’ve made noticeable gains in paying off your debts.
A letter of goodwill works because it is in lender’s and creditor’s best interest to have the most accurate representation of you as a consumer as possible. These companies make their money by lending to people. If they deny someone a loan or line of credit because of that person’s credit score then they don’t make any money from that person. Therefore, many companies are willing to agree to letters of goodwill and remove negative information from your report because doing so offers the most accurate picture of who you are as a consumer and borrower.
If you're wondering how to repair your credit it’s important to note once again that you can do all of these things yourself, or you can pay a credit repair service to help you. Credit repair companies don’t have any additional ways to fix your credit that you lack access to. Instead, you’re paying for their time an experience in dealing with creditors, lenders, and credit reporting agencies in order to get better results than you can achieve by yourself. Whether you ultimately attempt to fix your own credit, or hire a company to help you, your credit score is important. Use these tools to fix any mistakes or problems on your credit report, and enjoy the benefits of a brighter financial future.
Sean brings a decade worth of experience in credit repair to our company. Sean started his career working in an accounting department for a major credit card company. This was a natural fit, given his bachelor’s and master’s degrees in accounting.