Credit Repair

What is Credit Repair? How does it work? How does improving Credit Rating save one money?
Credit can affect your ability to buy a home, rent an apartment, buy a car, or even finance a new TV or refrigerator. If you have a record of bad credit, you will be denied loans and financing or you might have to pay excessively high interest rates to obtain them. Bad credit is a term used to describe a poor credit rating. A poor credit rating can be caused by a number of reasons including failure to pay household bills, mortgage or rent arrears, loan defaults and bankruptcy. A negative credit rating can result in being denied credit and loans.

Credit repair is a general term that refers to the practice of improving or rehabilitating one's bad credit. There are many people today who need to reestablish their credit worthiness.

Following are the steps involved in credit repair:

• Get A Copy Of Your Credit Reports – Credit reports are provided by credit bureaus or credit agencies. The three major credit bureaus of the country – Equifax, Experian and TransUnion maintain a national database of an individual’s credit history. Get a copy of your credit report from all three of them. Once you obtain your report, review it very carefully to see if there are any old or erroneous information in your file. If there are old, outdated entries of bad credit, they can be removed. Credit reporting agencies may not retain negative information for an excessive period of time. Typically, all your

credit history information remains on your report for 7 years. The exceptions are bankruptcies which will remain on your credit report for10 years and tax liens for 7 years from the time they are paid.

• Dispute Errors – Once you have gone through all the entries in your file and found errors, you can contact the credit reporting agencies and request deletion of the erroneous entries from your report. Keep all your correspondence with the credit companies and agencies so that you have proof of your requests. Keeping a record will help you to track the same errors if they reappear in your file. An action is taken within 30 days and if the credit bureaus determine that your request is genuine, they will remove it from your report.

People who have a bad credit report are often very anxious and willing to grasp at any straws to restore their credit. This could make them fall prey to the many scams that are now available online. Often this will end up in their hurting their credit even more. Following are some points that you need to keep in mind while trying to get your credit repaired:

• If you already have a bad credit, avoid signing up for any new credit cards. If you are still getting credit card offers despite your bad credit records, avoid them for they are most likely to be scams.

• Do not turn to one of the many companies that say they will erase your bad credit for a price. The only one who can permanently remove an entry from your records are the credit bureau or the creditor. Most credit repair companies will claim that they can create a new credit file for you, delete all negative entries from your credit reports or ask for advance payments to have your credit repaired. Do not fall for any of these scams.

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