Consumer credit repair
Rebuilding or reestablishing credit is a process that many individuals go through. Before you embark on this journey, it is critical that you have a basic understanding of the credit repair process (credit card consolidation, debt settlement, etc.) Although there are many ways to repair damaged credit, there are some initial steps that should be taken for each.
Step One: Get a Copy of Your Credit Report.
The first thing that needs to be done when repairing your credit is to assess the damage that has been done. You may find it's not a bad as you thought, or you might find that it is. In either case, it is what is, and that is what you have to work with. When you obtain your credit report there are several different options; it's best to obtain a copy that includes a dispute form.
Step Two: Evaluate Your Credit Report
Credit reporting agencies are required to maintain accurate information, and under the same guidelines they must remove inaccurate information. When you receive your credit report, review it thoroughly, and dispute any inaccurate information. This is a critical step in repairing credit.
Once the Credit Bureau receives the dispute form they will forward it to the institution that has reported the information. They then have 30 days to provide proof that the debt is legitimate. If the institution does not provide a confirmation as to the validity of the debt, then it must be removed from your credit report.
Once you've reviewed your credit report you can see exactly what you're facing and properly gauge the amount of work that you'll need to do. Don't give up! Rebuilding your credit takes time. This cannot be done quickly so consumers should not be discouraged if it looks like a lot to accomplish.
Step Three: Prioritize Your Debts
Once you have analyzed your credit report, it is time to begin your journey towards credit repair. You will likely have past due bills that need to be paid. These will not simply go away and anyone who is serious about rebuilding their credit, needs to address these outstanding debts.
For any accounts that are current, the first priority is to make sure they stay that way. Theses can be your saving grace because the longer your payment history is on current accounts, the better your credit score will be.
Once the open accounts are current and stable as far as the monthly payments, it's time to look at the old debts. Accurate information will stay on your credit report for seven years from the date of last activity. It is important to get these accounts paid off as quickly as possible, without falling behind on current accounts.
You will want to send as much money as you can to the past due debts or collection accounts. Don't want to worry about increasing the funds you are sending to your current accounts. They will be helping your credit just by making on-time payments.
After an account has been closed and when it is paid in full, that begins the date of last activity on the account. This starts the clock on when the information will be removed from your credit report. Keep in mind that as time passes, the significance of those accounts will become lessened due to the time frame since it occurred.
For the accounts that are past due but still open, you should contact the creditors and try to make arrangements to bring the accounts up to date. Most creditors will have some form of program that they offer to help consumers who have fallen behind. If your creditors are not willing to offer any programs to you, consider a legitimate counseling or even credit card consolidation.
That said, you need to prioritize your debts. Some may be high interest credit card bills. Look at the rates you are paying on each card, and consider credit card consolidation to reduce the overall amount of interest you owe each month. Whether you decide to consolidate your credit cards or not, these high interest debts need to be addressed as soon as possible.
Step Four: Take Action Towards Credit Repair
Now is the time for to take action on the information you have just learned. You can now see what is owed and what the priorities are to be paid. The next thing to do is start paying them. In order to do this effectively, you'll need a budget. Make sure that you are using the income you have appropriately and that you are not overextending yourself. There is nothing that can help you work towards credit repair more than time and diligence.
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