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Credit Repair Basics

It is not uncommon in today’s up-and-down economy for individuals to find it difficult to maintain a good credit rating. Even something as innocent as being a little late on a credit card payment can send a credit score tumbling downward, so having several late payments or other blemishes on a credit report can severely limit an individual’s credit worthiness.

The Effect of a Negative Credit Rating

A negative credit report can lead to an individual paying higher interest rates on promissory notes, additional fees for the establishment of credit, and the possibility of not being able to purchase needed items. This can be a serious issue that creates a great deal of stress and frustration, but there are things an individual can do about it.

Remove Incorrect Information from Your Report

In an effort to find ways to clean up a poor credit report, many individuals turn to credit repair companies for help. These companies usually charge a fee for their services and perform actions that most people can actually do themselves.

Disputing a Negative Credit Report

The basic premise of a credit repair company is that they can remove incorrect information from a credit file in order to increase the credit score. This is something that individuals can do themselves by obtaining a copy of their credit report and reviewing it for any incorrect information. They can then send a dispute letter to the credit reporting agency detailing what is wrong and why. The reporting agency must address the discrepancy and if it is incorrect, it must be removed from the credit file.

Negotiate for Reduced Credit Balances

Many times, carefully reviewing a credit report can disclose incomplete information or inaccurate items that can be removed through a letter of dispute. There are other ways to eliminate outstanding debt balances and court judgments from a credit file. One method is to negotiate with a creditor for a dramatically reduced balance along with a conditional agreement that the creditor remove any negative information from the file if the legal promissory note or credit card debt is paid for the agreed-upon amount. Negotiating with creditors in this manner should always be done in writing and never over the phone.

Secured Credit Cards Can Restore Your Rating

A good way for individuals with damaged credit to get back on their feet is through the use of secured credit cards or credit cards that extend credit by charging a fee. Secured credit cards are used against a balance that is deposited into a bank account, and as the payments are made, they are reflected on your credit report. Likewise, the fee-based credit card will charge for the privilege of extending credit but each payment made will improve an individual's credit score. Either way, the best method for improving credit is slowly reestablishing it responsibly over time.