Repairing Your Credit

Fundamentals of Credit Reporting

Credit reports are put together by credit bureaus. TransUnion, Equifax, and Experion are the three principal credit reporting agencies. Credit bureaus are private organizations that compile information about the credit history of consumers, and this information is sold to businesses that are permitted to see your credit history. Employers, banks, credit card issuers, mortgage lenders, and insurance companies can be included among these businesses.

Credit reporting agencies obtain most of their information from:

-people you owe money to (creditors)

-bankruptcy filings, lawsuits, judgments (court records)

-legal claims (county records)

Included in credit reports are:

-creditors’ names

-each account number and type of account

-date accounts were opened

-history of payments

-original loan amounts or credit limit

- current account balance

Any information on loan disputes or accounts in collection are listed on the report.

Noncredit data are also included in a credit report aside from the financial data. Your current name and any previous names, Social Security number, current and past addresses, history of employment, and marital/divorce history is included.

Credit Reports-Obtaining a Copy

An additional copy can be ordered each year if the following criteria are met.

-credit has been denied due to your credit report data.

-you are not working and are seeking employment

-you are receiving public financial support

-you suspect their are errors in your file due to identity theft or fraud, or

-You have been denied a job due partially or completely to information obtained form your report.

Correcting Mistakes and Errors

After receiving your credit report, be sure to examine it for inaccurate data in the noncredit and credit data. To find more information on removing erroneous data from your credit report.

Rebuilding Your Credit

You can either hire someone or repair your credit on your own. If you want to do it yourself, here is where to begin.

Renovate Your Credit Report: Begin by cleaning things up, that is, removing inaccurate data and mistakes from your report. *

Add Positive Data: Next, begin adding any positive information to your records. If data are missing from your report, such as accounts that are paid on time, send a recent statement to the three credit bureaus, along with records of payment history, and ask for these to be included in your report. Creditors are interested in stability, so ask the credit bureau to include this information in your report if it isn’t there already: employment history, current employment, telephone number, current residence, birth date, and checking account number. The credit bureaus will often do this, but they are not required to include this information. *

Credit Card Use: Potential creditors look at your credit report for historical evidence that your credit has been paid off on time. Your credit card should be used at least once every month. Making small, regular purchases and paying the entire balance in time is helpful. *

Submit an Application for a Credit Card: Applying for a credit card is helpful if you don’t already have one. A tarnished credit history may cause you to be rejected, but you can apply for a secured credit card. A family member or friend may agree to cosign your credit card or loan application. Ideally, you should have one to two credit cards issued by banks, perhaps a department store card, and a gas card. The ability to manage multiple accounts is something that creditors like to see. *

Keep ALL Accounts Current: Begin making all payments by the due dates. Utility bills, mortgage payments, cell phone accounts, and credit card bills must be paid on time. If you are never late, your damaged credit will be on the mend. Recent payments are more heavily weighted by lenders, so you can begin to prove you are currently not as much of a credit risk.

Rebuilding your credit so that you will not be denied a loan or major credit card typically takes around two years. After four years of on-time payments, you should meet the criteria for a mortgage loan.

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