Do-It-Yourself Credit Repair

Do you want to quickly restore and/or improve your credit rating?
Would you like to remove bad credit marks from your credit report?
Don't let previous credit problems slow you down. Regardless of your credit, past or present, you can safely and easily get out of debt and repair and rebuild your credit history yourself, even back to a strong "A+" standing, by following the simple steps that we have outlined in this section of the members area.

These steps will help you recover from your mistakes of the past. It will take some time and know-how, but you can repair the mistakes, wipe the slate clean and start over with your new understanding, know-how and determination to keep your credit clean and growing.

The following steps explain how to repair your credit yourself:

STEP ONE
Obtain a copy of your credit report to determine what you are going to need to do to repair your credit.

IMPORTANT! YOU MUST READ THE CREDIT REPORT GUIDE! This guide contains valuable information that will help you make wise decisions when trying to repair your credit. Please read it before continuing, it will educate and help you tremendously. It is also important to learn how creditors rate you.

When you apply for a credit card, loan, or any other financial instrument, the approval/disapproval decision is made by determining your ability to repay. The bank or company will pull a copy of your credit report and analyze your history of credit management. Your credit report will contain your complete payment history on your house, bank loans, credit cards, taxes, legal judgments, etc. If potential creditors see that you have met all of your obligations in a timely fashion, the chances of getting your requested financing improves. If they find out that you have been late, or made partial payments on your obligations, chances are they will not look too favorably on lending you more money or extending credit.

The easiest way to get a copy of your credit report:

If you have been turned down for credit somewhere in the last 30 days, you can obtain a copy of your credit report by asking the institution that rejected your credit application for a copy. They will supply it free of charge.

STEP TWO
Start to keep detailed records of all your actions. You will now be trying to correct errors and you will want to have a record of all your phone calls, letters, and actions while trying to correct these errors. The first thing you should do when you have a copy of your credit report is to check the accuracy of the information. People are not mistake proof! Often times, with the millions of pieces of information that a credit bureau handles, they make a mistake in reporting information. There have been cases where people have found their credit report to contain entirely the wrong information, or information pertaining to someone who has a similar name, address, or social security number. It is often very easy for someone to claim you made a late payment when in fact you made it on time! Check your name, address, phone number, social security number, birth date, etc., to make sure no mistake exists. List all the things on the report with which you disagree.

STEP THREE
Whenever you make a request/or credit, the bank or company that requests a copy of your credit report is listed as an inquiry at the bottom of your credit report. If you have a lot of inquiries on your report, it will be considered a negative sign by a lender. The lender interprets numerous inquiries as an indication that you are applying everywhere you can to try to obtain credit. This makes lenders nervous. Generally, inquiries are held on your report for up to 2 years. The more inquiries you have, the less likely you are to obtain credit. Usually, 4 to 6 inquiries within the last few months will begin to penalize your efforts to obtain more credit. So if you plan on applying at numerous institutions, spread your applications out over time to avoid bunching up a pile of inquiries that will get you rejected. Check the report to see if you have had duplicate inquiries listed. If so, call the company or institution and have them remove the duplicates. Make sure there are no entries on your report from companies you didn't authorize to look at your credit report. Many of the companies you deal with will be happy to remove inquiries if you submit a written request.

STEP FOUR
If there are items on the report that you are disputing, you should document everything you do in handling your requests to have these items removed from your credit report. Keep in mind that all negative items on the report should not be there longer than 7 years. If they remain longer than that, dispute the information and have the information removed. Keep in mind that it rarely pays to get upset at an individual over a credit item. Kind, courteous, and informative communication will pay in the long run! When you send the letter, send copies-NOT ORIGINALS-of all the documentation that supports your dispute. If you have a cancelled check, bank statement, receipt, etc. that proves your case, send a copy of it along with the letter. Keep in mind that you are sending this dispute letter to the credit agency and not the company that reported it.
The credit agency will check with the company that reported it to correct the mistake. It will probably take 3 to 6 weeks to accomplish this. Ask them for proof of removal or a statement of the outcome of the dispute. Credit bureaus only report what they are told by other institutions and companies. No matter what the agency says, they have a responsibility to investigate your request. If you don't hear from them in 6 weeks, send another request by certified mail.

STEP FIVE
If the item is not handled to your satisfaction, you should contact the company or institution who reported it directly. They will generally try to be helpful. If the company is located near your residence, go in person and talk to the credit officer about the dispute. You will get faster action. Otherwise, send the company all the information you sent to the credit bureau regarding the dispute along with the documentation.

STEP SIX
If, after your best efforts, you still can't have a disputed item removed, submit a statement (100 words or less) to the credit bureau which explains what has happened and have the bureau include it on your report. As we mentioned before, if you have checked your report and you have positive items which should be included but have not been reported, contact those companies and ask them to report your record of payment. Any positive payment listing will enhance your credit report.

FORMAL COMPLAINTS
If you feel that your rights have been violated and you are unable to correct a problem with your credit report, you can register a formal complaint with the Federal Trade Commission. Contact your local office (see yellow pages) and explain to them the circumstances and the action you have taken. They will request that you make a formal and written complaint. Click here to learn how to properly write a dispute letter.

How can I rebuild my credit?
After you've cleaned up your credit report and there are no longer any negative marks, try and get some positive information into your record.

Here are some suggestions:
1. If your credit report is missing accounts that you pay on time, send the credit bureaus a recent account statement and copies of canceled checks showing your payment history. Ask that these be added to your report. Having these on-time payment records on your credit report is essential to re-establishing your credit.

2. Stability:
Creditors like to see evidence of stability. Make sure that the following info is present on your credit report, and if it is not, send it to the bureaus and ask that it be added:

Make sure ALL of the following info is present on your credit report:

current employment

your previous employment (especially if you've been at your current job fewer than two years)

your current residence

your telephone number (especially if it's unlisted)

your correct date of birth and social security number

checking account number

3. Open a savings account and deposit money on a regular basis.

4. Get a Checking Account:
After opening your savings account, open an interest-bearing checking account. Possession of a checking account will help rebuild your credit. A checking account is one of the main factors weighed by bank lenders when deciding whether or not to give you credit. You should always leave a floating amount in your checking account. Every time you go under that amount, deposit more money. Keep your checking account in good order and have no overdrafts - it may determine whether or not you will be given credit!

4. Use Your Credit Card:
It is important to use your credit card every month to help rebuild your credit. Make small purchases and pay them off to avoid interest charges. If you don't have a credit card, apply for one. If your application is rejected, try to find a co-signer or apply for a secured card -- where you deposit some money into a savings account and then get a credit card with a line of credit around the amount you deposited.

Another Method of Obtaining Credit
For this plan to work, you need to start with at least $2,000. Borrow from friends if you have to!

1. Go to a bank of your choice and deposit the money in a savings account. Wait a few days for the account to be posted, return to the bank and ask for a $2,000 loan, offering the money in your savings account as collateral. Since your money is excellent collateral, the bank will loan you the money without making a credit check.

2. Next, go to another bank and open a savings account by depositing the $2,000 you just borrowed. Return to the second bank a week later and ask for a loan using your savings account money as collateral. Repeat this process with a third bank. Wait a few days, then open a checking account at a fourth bank. Begin making payments on each of the three loans. A week later, make more payments on your three loans until you have almost paid off all your balances.

3. Any credit investigation will now show you with (3) active bank loans, a checking account and a paying history for all three loans. Once you have established a good credit rating, you
may apply for loans, credit cards and other forms of credit.

How long does it take to rebuild credit?
If you follow the steps summarized above, it should take about two years to rebuild your credit. Hopefully, after two years, you won't be turned down for a major credit card, car loans, personal loans or any other type of loans. After around four years, you should even be able to qualify for a mortgage.