It is not the end of the world if you have found yourself in a position of negative credit. There are ways to go about fixing your credit- referred to as credit repair.
The first thing you should do is carefully go over your credit report to ensure that there are no billing errors, questionable charges or even fraudulent charges. Occasionally, a purchase can be charged twice to you and your credit card company will be happy to fix the error. And in this day of internet piracy, it is not uncommon to have your information stolen, and subsequently used to purchase items illegally. It's important that you guard your credit card number and information to ensure this doesn't happen, but if you find yourself the target of credit card fraud, it is usually a simple matter to demonstrate to your credit card company that you have been victimized. In fact, some companies will monitor accounts to ensure that no unusual activity takes place, and if they detect something out of the ordinary, will call the card holder to verify. After all, it is in the company's vested interest to halt all forms of credit card fraud.
If you do find any errors, do everything in your power to make sure the credit bureau removes them from your report. Generally, you will need to supply the credit bureau with the following information: company name of the disputed item, account number of the disputed item, and the reason why you feel this item is in error. The credit bureau will then review your case and investigate as necessary. They will then remove any credit report errors they find.
If, however, you have reviewed your credit report and have found that there are no errors or questionable charges, you may now be in the uncomfortable situation of having negative credit. You still have some steps available to clear your name. The Fair Credit Billing Act was passed in 1975 in order to provide fair and reasonable guidelines for resolving such disputes over credit reports.
The Act allows you to dispute any negative item on your credit report, and the credit bureau must verify within thirty days whether the negative item is true or not. While they are investigating, you do not have to pay the disputed amount. If they are unable to verify, they must remove that item from your credit report, and provide a written explanation of the findings for your credit report. If, however, they find the disputed item to be valid, you must then negotiate with your creditor and any collection agencies involved and agree upon a payment plan.
It is important that you live up to the terms of the agreed-upon payment, as doing so will help rehabilitate your negative credit, and failure to do so will of course reinforce your negative credit.
Negative credit reports that are proven to be valid then become part of your credit history. However, the Fair Credit Reporting Act as well as the Consumer Credit Reporting Reform Act govern what can go on your credit report and for how long. In general, negative items on credit cards, such as unpaid accounts, must stay on a credit report for seven years, with an exception for bankruptcy, if you have to declare bankruptcy at any time, that information will remain on your credit report for ten years.
Beware of Credit Repair Companies-these are companies that offer to help you repair your negative credit by filing disputes with credit bureaus on your behalf. However, there is nothing they are legally able to do that you can not do for yourself for free, and they will often charge hundreds or even thousands of dollars for the service, which may or may not result in you having a negative item removed. This is obviously problematic if you are having a hard time paying your bills in the first place. You may end up digging an even deeper hole for yourself. In fact, the Federal Trade Commission has sued credit repair companies in the past for falsely promising to remove negative credit reports from credit reports. There have been cases where these companies use stalling tactics and other questionable methods in order to attempt to cause a delay in the timely investigation of the disputed matter, thereby causing it to be removed due to reasons not related to accuracy. Such devices have questionable morality, to say the least, and it is better if you do not deal with them, as there is nothing they can do for you that you can't do for yourself anyway.
The best way to repair your credit is to deal personally with your financial institutions, including the credit bureau or bureaus, and to work with them to come up with a plan to pay off your debts in a timely, yet fair, manner.