Credit Repair Solutions

If your credit cards or mortgage applications are being rejected then, there is a strong possibility have a bad credit score. A low or bad credit score means you are seen as a high risk in the eyes of the banks and other lenders.

As they are in the business of making money they want to be sure they select borrowers that have the capacity to repay the money borrowed plus the interest rate.

Just because you have a bad credit score does not mean that you are a bad person, far from it. However, having a low score can make your life much more difficult and expensive.

That is why it is important to look at available credit repair solutions that can raise your credit score and get your life back on track.

Solutions to repair your credit will depend on your financial situation. If your debts are manageable you could choose to fix your credit score by doing it yourself.

On the other hand if you have taken on a large amount of debt and your finding it hard to cope you may want to consider seeking professional help and consult a credit repair company.

We will go into these 2 credit repair solutions in more detail as follows:

The DIY Credit Repair Approach

The DIY approach is the cheapest way to improve your credit score. The only real cost is the time you need to spend on it. Although the cheapest option, it certainly is not the easiest one. To succeed you need to be organized, persistent and committed to getting your finances back in order.

(a) Improve Your Credit Reports

The first step begins by obtaining a copy of your credit reports and scores. There are three and they are produced by the three major credit collection bureaus called Experian, Equifax and TransUnion. Each have a website where you can download your report and scores. Under Federal Law you are entitled to a free credit report every year. However, the report does not contain you FICO credit score and you will have to pay a fee to get this.

Check your credit report carefully for any details that are incorrect or out of date. If there is any negative information on your report that is true then, you cannot really do anything about it. For example, bankruptcy can stay on your report for between 7 to 10 years. The only solution to this is to be patient and improve the way you handle you money.

If you identity any false or incorrect information you can challenge the relevant bureaus by writing a dispute letter. It is important that you provide supporting documents and a copy of your credit report with the disputed entries highlighted.

The credit bureaus have up to 30 days to review your case from the date they receive your dispute letter. The credit bureau will notify you of any changes made to you file.

(b) Negotiate With Your Creditors

If you are having problems meeting the payments on certain credit cards or loan accounts then, take action by contacting your creditors directly. Ask them if they can reduce your monthly payments and change the dues dates so they are more affordable. Most creditors will be willing to do this as long as you are sincere about paying your debts.

(c) Create a Budget

A budget will give you a clear idea of what money you have coming in and coming out. It will also help to discipline you in identifying where you can save money. When you list out all your expenses you can identify where you can save money on items and services that you do not really need.

The idea of the budget will help you become more disciplined with money and to live within your means. When your income exceeds your outgoing expenses use the surplus to pay of your debts starting with the highest interest rates first and then continue until you have wiped out all your debts.

Using Credit Repair Companies

A word of warning. The credit repair business has more than its fair share of scams. In the current economic climate more people are facing debt problems and are turning to specialized companies that offer credit repair solutions. The ever increasing demand for specialized help is also increasing the risk of credit repair fraud.

There are many reasons why these services are useful. The credit repair process can take a long time and a solution that can speed up the process can look very attractive. For example, correcting mistakes on your credit file can be a lengthy process because it can take months to correct a mistake on your report.

The credit agencies may collect peoples credit history and personal data but they do not have the responsibility of ensuring that data is correct. Credit repair companies can save you time by doing this for you for a fee.

Many credit repair firms make outlandish claims that they can erase your bad credit. The reality is they cannot do anything more than you can apart from saving you time. If you are in the situation where time is not on your side and the debts are piling up fast then, the option of using one should be considered.

Use Due Diligence When Choosing A Credit Repair Company

Stay clear of firms that make outlandish promises that they can give you the perfect credit score by removing public records from your file. They cannot do this unless it is illegal. Public record entries that include chapter 7 and 13 bankruptcy can have a huge negative impact on your credit score however, they must remain on your file for between 7 to 10 years. The only thing that can remove these is time.

There are reputable companies out there. It just takes time and research to find the respectable ones that are not going to rip you off.

Here are a few credit repair tips in finding a reputable company:

Check with the Better Business Bureau and the State Attorney General's Office to check whether the company has received any complaints from customers.
Ensure the company explains in writing your rights as a consumer under Credit Repair Organizations Act.
Before using any of their services read through the contract carefully and fully understand what you are signing.
Request that you wish to speak to some of their past customers.
Ensure they provide you with details on their fee structure and how they will charge you.
Ensure they provide you with details on how long they will take to achieve what they promise you.
Make sure the contract has a 3 day grace period which means you have 3 days to cancel after you sign it.

If the company hesitates to give you any the information listed above and they are trying to sell you services you do not understand then walk away and continue your search.

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