CREDIT REPAIR TIPS
Dec 26 '00 (Updated Mar 28 '01)
The Bottom Line If you find that your credit is in a less than favorable status, there are some things you can do on your own to help reverse your bad credit.
More people than ever are finding that their credit has been overextended and that they are almost out of control with debt. Many see filing bankruptcy as the only option to relieve the pressure of all the constant demands for payment. Bankruptcy, however, should not be looked upon as a means to repair credit. Credit repair can be accomplished with planning, skilled help and a real desire to improve credit rating.
The first step to repairing a credit rating is to find out exactly who is owed and how much. Current credit reports should be obtained from all the major credit reporting bureaus (Equifax, etc.). Free copies are available if credit has been denied within the previous 30 to 60 days. After obtaining these reports, go over the information carefully and check for inaccuracies. If any of the information is not correct, it should be disputed immediately and in writing. Credit bureaus must investigate this disputed information within thirty days. You may find that some information is outdated (over 7 years old) or that personal information is inaccurate. There is also a possibility that some of the credit information belongs to someone else. To help prevent credit fraud, obtain copies of credit reports at least once yearly.
If you find a large number of credit inquiries in your file, request that entries from the same companies be merged, since excessive credit inquiries can be seen in a negative light against your credit. After you obtain credit reports, try to evaluate your position. If you are not able to make at least the minimum payments required, contact your creditors personally. Many creditors would rather accept reduced payments than have you file bankruptcy where they may receive nothing. Some may even agree to reduce payments permanently or at least temporarily.
If you find, however, that you are unable to come to a compromise on your own, contact a credit counseling agency. These agencies have knowledgeable people on staff who are experienced in the credit field. Do not confuse these with the commercial "credit repair" companies which claim to be able to repair your credit for a fee. Some of these companies will make claims to erase a bad credit file or give you an excellent credit rating. This is a scam since there is no legal way these companies can do this. Legitimate credit counseling agencies are available to the public at no charge. These counselors can be invaluable when you feel you have reached an impasse in dealing with your creditors. Your counselor will evaluate your situation and decide what strategy is best, depending upon your personal financial circumstances. They will then contact your creditors and try to come to an agreement that benefits both sides.
You may be requested to close some accounts, live on a tighter budget, pay bills through the agency or some other strategy which your counselor feels will fit your situation best. If your creditors agree to the credit repair terms, they will suspend any collection efforts as long as you abide by the agreement. So, it is important to make sure that you can live up to any commitments you make.
Credit repair may be a lengthy process but is well worth it since can be done free and will not leave negative entries to your credit file, as with bankruptcy.
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