Do It Yourself Credit Repair Kit?
DIY Credit Repair for Dummies The process of enhancing your credit score and correcting mistakes in the credit report does not necessarily require hiring costly credit repair companies. By investing some time and effort, you can challenge the negative entries, make sure the positive information is being reported, and start establishing a good credit history. It is important to note that the following is a step-by-step guide to do-it-yourself credit repair.
Get Your Credit Reports The first process is to get the credit reports from the three major bureaus of credit namely Equifax, Experian, and TransUnion. This enables you to check the reports for any wrong entries which may be pulling down your score. Annualcreditreport. com provides one credit report from the three bureaus in the year. Go through all three credit reports thoroughly and look for all negative entries, paid or unpaid bills, collection accounts, or any other thing that may be of concern.
Dispute Misleading or Fake Merchandise If you get your reports and realize that there are accounts that belong to other people, repayment that was made after the due date but was reported otherwise, or any other entries that are wrong, you have the right to contest these with the credit bureaus. Writing draft letters of dispute that should indicate the items under dispute and copies of documents that support them. Some common issues involve accounts that originated from identity theft, wrongly reported late payments, charge-offs that should not have occurred, and so on.
Continue Making On-Time Payments Another great habit that should be maintained is paying all minimum payments on time as this is also good for credit. A significant part of the score is payment history, so always paying all accounts on time will help increase the score gradually. For instance, a few late payments in the past will be balanced by showing a clean record of on-time payments at the moment.
Pay Down Balances Having high balances on revolving credit such as credit cards also affects the credit utilization ratio which is the second component of your credit score. To reduce this ratio, work on paying down balances – aim for the figures to be below 30% on all cards. This ratio can also be reduced if the balances are spread across multiple cards if one cannot afford to clear balances fully.
Limit New Credit Applications Each time you submit a credit application, it reduces your score since it is a ‘hard’ inquiry, even more so if you apply for many accounts at once. It is best not to apply for new credit as often as possible – too many within a few months may indicate a serious financial problem regardless of whether your application is approved or not. The best way to avoid having too many hard inquiries is to space them out by at least three to six months.
Enroll in Credit Monitoring It is advisable to sign up for a simple credit monitoring service so that you can check your reports frequently for any changes. As mentioned earlier there are many free options available to monitor your reports without having to pay for a monthly subscription. It helps you keep track of new accounts opened in your credit file, as well as modifications detailed by the current creditors every month.
Consider Secured Credit Cards For those who are still starting from a low point, secured cards entail paying a cash deposit which becomes the credit limit and can be useful in building a good credit history. Make small charges monthly and pay the balances to show that one can handle credit well. Sometimes after about a year of making timely payments, you may be considered to be upgraded to a standard unsecured card.
Become an Authorized User If you have a friend, a relative, or even your spouse with a good credit score and generally low credit card usage, you can simply fix your credit status by being an authorized user of the credit card account. A good payment record, and freedom from past credit history such as payment history, and credit age will begin to reflect on your credit usually within a couple of billing cycles.
It is recommended to review credit reports at least once a year to identify any discrepancies. It would be wise to request all three credit reports annually to review the information that the bureaus have on file. Challenge any error as soon as possible before the error is compounded and lowers your scores even more. You can also collect more credit reports through a free site without affecting your score from too many hard inquiries. When you check your report it is referred to as a soft pull and does not harm you in any way.
If you have negative items on your credit report, develop a Credit Repair Action Plan. The best tactic when it comes to DIY credit repair is to write down a detailed plan that includes the action you will take about late payments, collection accounts, disputes, and good history. Modify this plan as you proceed to ensure you do not deviate from the intended course. Paying close attention to one’s credit report and challenging negative items where necessary is the key to seeing your credit score rise most of the time over any negative entries as time passes.
Indeed, repairing your credit on your authority does take a significant amount of time and determination. However, the cost savings of not having to pay for credit repair company fees can offset it. Education on credit reporting in the process is a huge plus and this will lead to better credit decisions in the future. Abiding by sound credit practices will show lenders that it is possible to regain a good credit rating through their efforts in credit repair.
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