How to Fix Your Credit Report

Finding your way back to credit worthiness does not need to be a huge ordeal. While it does take time and considerable effort on your part, with proper understanding of all that is involved, it can lead to personal financial freedom.

The reasons for why consumers enter into bad debt are varied and different depending on who you talk to. For those who have a conscience at all -- they well realize how a blemished credit report can come home to haunt them.

What needs to be well understood is that the reason why a debtor is perceived as being in debt in the first place can be false! Take the example of a 30 year old John Doe. John arrived home one day to find a phone bill from Sprint in his mail. He realized quickly that there was a problem. He had never dealt with Sprint ever in his life and now Sprint was insisting that John owed them money.

The bill was taken to Experian and John filled out a dispute form online. Because of John's knowledge of Experian's expertise in dealing with such matters, the problem was corrected within 2 weeks. This was a matter that was easily and quickly dealt with resulting in the blemish on his report was taken off. For some, they don't even realize that this type of service is available and simply will suffer through a bad rating.

Use Borrowing Common Sense

If you're about to apply for a mortgage or car loan, it's a good idea to check your credit history first. That way you can fix any errors and point out any blemishes that do belong to you in advance.

It's common for reports to have errors. A credit agency claims to have recorded information on the wrong report on more than one occasion. The most common mistake is an account listed on a consumer's record that doesn't belong to you. The more common your name is, the more likely this will happen.

To be on the safe side consumers are smart to routinely check their credit reports once a year. No one is going to care about the accuracy of your report the way that you will. You should get your report from all three major credit agencies because they may contain different information.

Correcting Information

If you find an error, the Fair Credit Reporting Act requires credit bureaus and organizations that provide information to them to correct the mistake. But you have to get the ball rolling by requesting an investigation.

• You can file a dispute online, by phone or by certified letter. A letter should include:
  • Your complete name, address, date of birth and social security number.
  • The name of the company you have a dispute with and account number of the disputed Item.
  • The reason for your dispute, any corrections to your personal information and a request for correction.

Put a good claim together by gathering documentation and do your research well. At this point you will be well prepared to issue a letter. Disputed information that can't be verified must be deleted by the credit bureau. If an investigation isn't resolved in your favor, ask the credit bureau to include your version of the dispute in your record.

Accurate negative information usually stays on a credit report for seven years - ten years if you've filed for bankruptcy. If you know the blemish on your report is accurate, you'll have to live with it. The best way to repair your credit is to pay your bills on time and start building a spotless record.

Defining "Credit Report"

As consumers we have been falsely lead to believe by the credit industry to equate the contents of our credit report with our credit worthiness. The two are not the same!!

A credit report may show that you have consistently made each of your payments on time for your complete life and still you are not worthy of more credit because you can't ever pay off the credit you do have.

What is a Credit Report Then?

A credit report contains your history. Under federal law you are entitled to an accurate history, but not to a re-writing of truthful history. That history can properly include delinquencies or bankruptcy. Your credit report is not an accurate guide of everyone you may owe money to. A debt can be charged off, but, does not necessarily mean it is not legally enforceable.

Credit Reports after Bankruptcy

Your bankruptcy can be reported on your credit report for 10 years after you file. If you file a bankruptcy and voluntarily dismiss it before the discharge, the credit reporting agency must report the dismissal as well as the bankruptcy filing.

Assuming you have income, you should be more credit worthy after a bankruptcy than you were before, since your old debts no longer have a claim on your future income.

After the discharge, you are entitled under federal law to have the balance of each discharged debt reported as "O". The history of delinquencies can be reported, but the balance must be zero. If it is has not been reported, you can dispute the debt.

Negative history on your credit report is no more that that, history. It does not doom you to perpetual credit rejection. You are challenged to strengthen your financial situation by saving and using credit carefully.

Fixing Your Credit Report

You can manage to have errors in your credit report corrected on your own. Don't make the mistake of engaging credit repair agencies, as many offers are scams that will waste your money and, possibly, involve you in a crime.

Under the Fair Credit Reporting Act, you can challenge information that you believe is inaccurate. If the reporting agency can't verify the accuracy of the information, they must remove it. When you take the time and effort needed to fix your credit report and credit history you will receive the benefits almost immediately, otherwise, you will be subject to costly denials when applying for further credit.