To contemplate repairing your credit, first you must know and understand the makeup of how credit repair works and exactly what is showing on your credit report to know where to start. This will determine how to repair your credit and if you need to seek professional help. With the review of your credit report and understanding how and when you have paid your accounts and what might be misinformation; you will have a better knowledge of where to start and how to proceed. Let me explain:
1. Sometimes there may be a trade line of credit which has been reported to your credit report simply because one of the numbers differs in the social security number. Meaning an account may not be yours, but belongs to someone else.
2. Additionally, there are times when names get to be an issue. For example: Robert E. White versus Robert A. White or Robert E. White, Jr. versus Robert E. White, Sr. Mary Ann James versus Mary Jane James, etc.
3. There are times when a payment could have been made and the creditor posted it incorrectly or they did not get the payment, when you thought they should have. You should know the difference.
4. It is not that unusual to have errors on a credit report when a mortgage company transfers a mortgage loan to another servicing mortgage company. This can be corrected with documentation also.
5. To correct something that is not accurate; you will be required to present the documentation to back it up….bottom line, the bureaus will not just accept your word for it. Once you know what is on your credit report, it is important to know how you have made your payment and that you have receipts for everything (including canceled checks or bank statements) that is derogatory.
6. You should remember that each major bureau, Equifax, Experian and TransUnion are separate entities. They do not report to each other, therefore when correcting your credit, it should be reported to each agency. The phone numbers are available online and with their addresses.
7. While the bureaus do not report to each other; banks, credit companies, and loan companies do not use all three bureaus. Only mortgage lending is required to pull a tri-merged credit report. Therefore when you make a loan from one bank for a car loan, the loan may not be reported at all three agencies. Sometimes they are, but not necessarily. With the aforementioned that is why one should have a copy of each bureau report so that they know exactly what has been reported to each bureau. When a mortgage lender pulls a tri-merged (all three bureau reports), all information is obtained.
8. After you have received your reports (each bureau will send you a report upon request). Analyze the report for possible errors and submit the documentation to back up the errors. The bureau will then investigate the issue and correct it accordingly (if it is truly an error). They will send you something in writing.
Repairing Derogatory/Bad Credit:
There is not a genius way to “Repair Bad Credit.” It is something that takes time and a desire to stick with the process until you are done. Bad things happen to good people and bad credit can occur from a lot of different situations not brought on necessarily by being a person who just does not pay their credit obligations.
With that said; public records to include collections, judgments, liens, tax liens, and deed-in-lieu etc. stay on the credit report for seven years. Bankruptcy will be there for 10 years. A late payment of 30/60/90 or charge off, on an account will stay there even after the account is paid off or closed.
To repair the bad stuff, one must seek to pay their credit obligations before or by the date they are due. When you wait for the grace period to come you are setting yourself up to have late charges and possibly delinquency.
After a period of bad credit; normally a lender will review the accounts to see if they are isolated. If they are isolated it means that you possibly had a time of hardship with can be explained and present a favorable future of paying your debts. Usually after at least 24 to 36 months has expired since the “bad” or untimely payments you can start to re-build your credit. One step at a time and with a lot of caution from the past experience and the longer it gets from the derogatory credit, slowly your credit rebuilds.
What can happen though is if a person has repeatedly had bankruptcy, judgments, collections etc. along with 30/60/90 day late payments; most lenders will not offer you a chance to re-establish your credit. There must be a span between the present and the past to be considered a good credit risk. This has grown to be one of the main issues in lending in the last three to four years since the fall of the housing industry which has affected most lending institutions.
This is similar to starting over in any thing about life. When ones credit is badly affected with which there can be no corrections; it take some time to re-establish good credit practices which are favorable to lenders.
Credit Repair Agencies:
As a general rule one must be careful when selecting a credit repair agency. The reason is because they are out to make money, just like everyone else. It has been know that clients turned their money over to the Credit Repair Agency and the payments were still not paid in a timely manner. However, this is always the case and if you do not have the time or talent; then it can be a useful decision. You will still need your own backup documentation for anything that is not consistent. If you seek a company to help with your credit repair; check with the BBB (Better Business Bureau) and make sure they are legitimate. Find references on their website or somewhere. It is not wise to deal with a company who is not known by anyone. You are seeking repair; not more delinquency.
HUD has also announced that they are funding $74 million dollars for credit counseling which is 22% more than last year. $5 million is set aside to train 4500 individuals’ who might be interested in obtaining this training.