How To Repair Your Credit On Your Own

January 09, 2018

As we embark on a new year, one of the top goals I am hearing about is improving one’s credit. If this is one of your goals, just remember that as you look for help with this goal, that all that glitters is not gold.

One of my cousins came to see me excited over a meeting she recently had. She was excited because she had just met with a credit repair company that promised that they could get all of the negative credit items taken off her credit report and could get her score high enough so she could buy a home.

Owning your credit mistakes

Knowing that my cousin was not the most fiscally responsible person in the world, I suspected most of the negative information on her report was hers. I told her under most circumstances, no one can remove negative information that is accurate — if you did the deed, you owe the money.

A shady plan

So I asked her how the credit repair agency was going to do this. She outlined the plan they gave her, which is almost a textbook example of how to know when you should run from a credit repair agency. Here’s what told me that this plan was a scam:

The red flag that should send you running

In order to have the negative items removed from my cousin’s report, they told her that they were going to report her negative debt as fraud. Which is ironic, because by doing this they are committing fraud. I told her that this is a lie, it’s illegal and all a creditor would have to do to disprove the fraud claim is to go into her closet, which looks like an exclusive shopping mall, to know that she is responsible for every purchase.

Red flag #2

She was also told to get an Employer Identification Number from the IRS and to use the Employer Identification number instead of her Social Security number when applying for credit. This is also fraudulent. I told her that unless she wanted to live the “Orange is the New Black” life, she probably shouldn’t try that move either.

Once she realized that she was basically being asked to lie, which she knows is wrong, she asked if there are credit repair companies that aren’t scams. I told her that yes, there are legitimate credit repair agencies out there, but there is nothing that they can do for you, if you aware willing to put in the effort, that you can’t do for yourself.

How proper credit repair works

Obtain your credit report. The first step is to review your credit report from the three main credit reporting agencies. You can obtain your credit reports for free from all three credit agencies by visiting annualcreditreport.com

Look for inaccuracies or errors. Review each of your reports for information that is inaccurate, incomplete or contains information that should not be reported. Check out Nolo’s credit report checklist for information that should not be on your credit report.

Dispute actual items that are incorrect. If you do find something wrong, you can dispute those items yourself online at each of the major credit reporting agencies’ websites. Experts recommend also sending a detailed letter to the credit bureau with the error, as well as the creditor listed, telling why the information is wrong with the evidence to back up your claim. Under the Fair Credit Reporting Act, a credit reporting agency has to respond to every dispute it receives within 30 days.

Check your benefits for help. Consider contacting your EAP or legal benefit program at work to see if you are eligible for free legal services to help you clean up your credit.

Take care of other detrimental items. If your credit is bad due to legitimate items like past-due bills or high credit card balances, then the solution won’t be as simple and will require a little more discipline and follow-up.

For past-due accounts and items in collection. Once you’ve verified you actually owe the money in collection, follow the CFPB’s guidance on what steps to take to negotiate a settlement.

For high credit card balances. First, call your card company and ask for a limit increase. BUT DON’T USE IT. What you’re trying to do is decrease your credit utilization, which will give your score an immediate boost. If you’re maxed out, an increase probably won’t going to get you all the way to where you need to be for your best score, so it’s time to make a plan to pay down the cards, starting with the accounts that have the highest utilization. Then stick to it.

It won’t be easy, and it will take time, but with a little bit of work you can clean up your credit report on your own, without having to worry about scams.

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