Despite What “Credit Repair Agencies” Tell You, This is the Only Fast Way to Repair a Credit Score.
One question I get constantly asked about is how to repair distressed credit scores. The old days of loans being extended by banks on little more than a handshake and a promise have long passed us by. Today, our credit score will determine if we are approved for vital things like an auto loan, mortgage, or even whether or not a landlord will rent an apartment to us. Many other businesses are also using credit scores to determine whether or not they will require a deposit from a consumer in order to extend them service, such as cell phone carriers, electric companies, and gas companies. Insurance companies often give discounts to customers with better credit. With so much riding on good credit, it is easy to see why someone who has a poor credit score would want to improve upon it.
I often tell people that fixing bad credit is a lot like losing weight. You will see tons of services and companies providing offers that promise quick solutions. There is no quick solution to improving a bad credit score, just like there is no quick solution to losing weight. There is one caveat to that, and that is if there are errors on your credit report.
You credit score is derived from the information contained on your credit report. If there are negative errors on your credit report, then getting those corrected can improve your credit score fairly quickly. This is the first place you should start. Obtain a free copy of your credit report by contacting TransUnion, Experion, and Equifax. These are the three primary credit reporting agencies. You need to obtain your credit report from each of them to look for errors because one might contain an error, while the other two do not have that same error.
There are a couple of errors you want to look for. First, are there accounts showing up on your credit report that you cannot account for? If so, contact these creditors to let them know they are appearing on your credit report even though you are not doing business with them.
Second, you want to look for balances that are out of whack. Remember, that the balances on your credit report are not accurate up the minute. If you just made a $1200.00 payment on a credit card last week, that is not going to necessarily be reflected on your credit report right away. However, if your mortgage has a balance of $50,000, but is showing up as $150,000, that is something you want to look into.
The third type of error you want to look for is incorrect payment history. You want to make sure your creditors have not reported any payments as late that were not in fact late. If you find any discrepancies, you will want to notify the credit bureau and the creditor, both in writing. The credit bureau has 30 days to look into the matter and make a determination on it.
Sometimes, even if a creditor has reported a payment as late, you can get this removed. Let’s say you had a month where something unexpected happened, and it forced you to make a late payment on a credit card account. That late payment, however, was the only time you ever paid late with this particular credit card. Often times if you write to them, explain what happened, and remind them that you have been a long-time loyal customer who only paid late once, you can ask if they will help you out by removing this late payment on your credit report. You might be surprised at how many will actually say yes.
This is the first step in repairing a credit score. Make sure everything is accurate to begin with.