Credit Matters

One of the many questions I hear is: how does credit repair work?  It’s really not all that complex.  There are certain steps that are required to be followed to repair your credit.  If you follow these steps you will see a noticeable difference in your credit score in a few months. 

Step 1 – Where do you stand?

If we don’t know what’s broke we can’t fix it.  The first order of business is to get a copy of your credit report.  There are plenty of places to get a free copy of you credit report. As a matter of fact the three companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, click on http://www.annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. 

Another route you can go is to sign up with a credit monitoring company like Experian Triple Advantage or Citi Credit Monitoring Service.  These services will provide you with a free copy of your credit report just for signing up for their 30 day free trial of their credit monitoring service.  I would suggest you sign up for one of the monitoring services while you are working on your so you can measure your progress. 

Step 2 – Pay your bills on time.

This probably should have been number 1 but we’ll leave it here.  The single most important thing you can do when it comes to repairing your credit is to make sure you pay all your bills on time.  Until you stop the downhill slide you can’t move forward. 

Step 3 – Look for mistakes.

Depending on who you talk to it’s estimated that 50% - 80% of the credit reports contain errors.  These errors can be simple or than can be complex and very costly.  The point is, we don’t want any mistakes on our credit report.  For example:  it’s possible that you have a credit account listed on your credit report that doesn’t belong to you.  What makes it worse is that this account could be in default and you’re stuck with the consequences. This is one of the simple errors to correct but if not corrected can cause you all kinds of problems. 

Step 4 – Report all mistakes.

Notify the credit reporting agency, in writing, the mistakes you found. Include copies (NOT originals) of all the documents that support your position. A good idea is to enclose a copy of your report with the mistakes circled. Make sure you send your packet by certified mail, “return receipt requested.” Keep a copy of all the information you disputed and all the documents you send to the credit bureaus. 

Step 5 – Follow up with the Credit Bureaus.

Continue to monitor your credit report and follow up with the credit reporting agencies to make sure that all errors are corrected.  If you can not resolve your issues with the individual credit bureaus there are other steps you can take.  For more information, see How to Dispute Credit Report Errors at ftc.gov/bcp/conline/edcams/credit/ . 

Those are the basic steps when it comes to credit repair.  There are some other advanced steps that I may cover in a later article. 

Another option you have to you is to hire a credit repair service or to order a do it yourself kit.  If you choose to hire a credit repair service then you can expect to pay and up front fee, (Set-up Fee), and then a monthly charge between $30 - $60 per month for as long as the process continues.  Don’t make the mistake and think that these companies are going to do everything for you, they don’t, they act as a counselor and help guide you through the process.  You still do all the legwork. 

If on the other hand you decide to purchase a Do-It-Yourself Credit Repair Kit you can expect to spend between $50 to $100 for the kit.  The good thing here is you get all the information the credit repair service has but it’s yours to keep.  Almost all of the credit repair kits out there contain sample letters to dispute errors, tracking sheets to track your progress and information on all the laws pertaining to consumer credit.  One last advantage these kits contain are advanced techniques on how to improve your credit score not just repair your credit. 

No matter what you decide, remember this is going to take time and you should be subscribed to a credit monitoring service while you’re working on your credit score. This way you can track your progress and make sure your efforts are paying off. 

I would not pay more the $15 a month for any credit monitoring service.  If you need help finding one, here are a couple I’ve used in the past and I was very happy with their service.  Visit: Credit Monitoring Service