Credit Repair 101
Credit repair is a versatile financial tool. If you’re confident enough in your financial abilities you can go with the do-it-yourself rout or if you’re more comfortable with hiring a professional, there are credit repair services that you can pay for.
Whichever option you choose, all the steps that you’ll go through are the same; the only difference is who prepares the work. Even if you decide to hire a professional it’s important that you’re still knowledgeable about the credit repair process. This should help you maintain peace of mind.
The following is a step-by-step overview of the credit repair process.
Step 1: Pull Your Credit
Firstly, you need to see all three of your credit files in order to see what situation you’re in. This requires getting your credit report from Experian, Equifax, and TransUnion, all three of the credit agencies. Moreover, each bureau has a unique and specific way of creating your credit report and keeping track of your credit history. Thus, it’s necessary to have three copies in order to repair your credit completely.
You are entitled to obtain a copy of each credit report once a year, free of charge. To download copies of your credit report, go to annualcreditreport.com.
Step 2: Review Your Reports
Secondly, you must thoroughly go through each credit report and analyze the information in order to find mistakes. The following list presents very common errors that can decrease your credit score:
- Incorrect aliases (i.e. the bureau links accounts from an alternate name that isn’t you)
- Late or missed payments that were really made on time
- Outdated or incorrect account statuses
- Overestimated account balance
- Duplicate accounts
- Paid collections accounts
- Paid tax lien
- Outdated credit penalties (outdated bankruptcy, foreclosure, etc)
Step 3: Write a Detailed Dispute Letter
Once you’ve identified any mistakes that might have been included in your credit reports, you’ll need to write a dispute letter and send it to all 3 of the credit reporting bureaus. If you’ve found several errors on one report, it’s best that you only include a maximum of 7 in your dispute letter. If you have more than 7 errors you should consider splitting them up into 2 separate letters.
In addition, each bureau has online portals where you can claim your disputes. However, many professionals agree that writing a traditional letter is better and more convenient that an online portal.
When you submit your letter, make sure to include copies of all statements, checks, and any other evidence that can prove that there is in fact false information included in your credit report. You should also keep the original copies for your personal records. If you do send a letter, don’t forget to use certified mail in order to verify the date of delivery.
Step 4: Wait For a Response
A 30-day time limit will begin once the bureau obtains your letter of dispute. This means the bureau, creditor or lender has a maximum of 30 days to research the issue and confirm the information or verify the error.
Sometimes, the bureaus require additional information or documents. If you’d like to advance the process and avoid delay, make sure you send any additional information needed as soon as possible.
Step 5: Receive Confirmation
If the mistake is verified (or the information simply couldn’t be confirmed by the lender, or the bureaus didn’t respond after 30 days), that item will be taken off your report. Moreover, the credit bureaus are obliged to send a new copy of your credit report, proving the errors have been removed or adjusted.
If the information that you thought was an error is confirmed to be correct, it remains on your report. However, by law, you’re allowed to write a 100-word statement that will be included with your credit report regarding any issues you have concerning particular information that was not removed from your credit report.
As we discussed above, if you have more than 7 errors you want to dispute you should break them up into several letters of dispute. Once all the errors from your first letter have been settled you’ll then be able to move onto your next letter of dispute. Continue going through steps 3 to 5 until all issues on your credit report have been settled.