All the Steps to Improving Your Credit
by Diane Conlinn, February 2, 2001
I personally believe it is better to get rid of unsecured credit and never
use it again. So, I don't personally care if my credit report is ever repaired.
If I just keep doing what I'm doing, my credit report will be repaired. Time
heals all wounds. I also believe in repaying one's debts.
But, if you want your credit rating restored, the steps below have been found
helpful.
1. Get a copy of your credit report from the three major credit report agencies:
Trans Union:
http://www.transunion.com/CreditReport/
Experian:
http://www.experian.com/consumer/index.html
Equifax:
http://www.equifax.com/resources/fcra_info_rights.html
Each of the above agencies will tell you how to get a free report or a copy
of for a nominal fee, usually a total of about $25. (Note, other places who
provide this service charge more than this for all three).
2. Note any erroneous statements, and be sure to write a certified letter
to the agency requesting their removal. Please note their identification requirements.
3. Repay your debts and once they are paid get a letter from that creditor
or a receipt showing the account is paid in full. Write a certified letter
to the creditor and ask them to please note that the account is paid in full.
4. Note that getting items removed by the Credit Reporting Agency doesn't
keep them removed. The next reporting cycle, if you haven't satisfied the
debt, the debt will be reported again, and the bad comments will be back on
record. That is why repaying the debts is really a fine way to get your credit
improved.
5. Declare bankruptcy and after 10 years the bankruptcy is removed from your
credit report and all the debts that went with it.
6. Go to a debt relief organization and have them handle payments to your
creditors. There will be a note on your record that they did this, but many
creditors don't necessarily find that to be a bad thing.
7. Find out what your credit rating is. The following link has a free credit
rating analyzer.
http://www.freecreditanalyzer.com/
(They also offer other services, and I have no idea whether they are good
or bad)
8. Reestablish your credit by paying off small loans, or getting a secured
credit card (Use any online search site and look for "secured credit
card:). I would recommend only using credit companies you've heard of. And
read the legal agreement before you sign so you know the details such as interest
rate, late fees, if there will be interest gained on your savings backing
the secured credit card.
Pay these credit cards on time or earlier. This serves two purposes, first
you find out if you can handle credit, two, you establish new credit by showing
your ability to repay your debts.
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The second method which I prefer is to repay your debts, and not incur unsecured
credit again. Save money to buy the things you want, don't pay the interest
to a creditor, gain interest by saving money in a bank account, or by investing
in bonds,stock, or the money market.
Pay cash for your cars. Pay up front for everything that you can. And only
obtain secured loans for other items, such as buying a house. Sometimes buying
a house is not a good investment in a market where housing rates aren't going
up, unless the tax benefits are substantial enough. Investing your money in
stocks is better. On the other hand, in some parts house prices are rising
so rapidly that you could make enough to fund your retirement out of investing
in a home and paying it off.
About four years ago, I decided would rather sit on the floor, or sleep in
a tent rather than get unsecured credit again. But, if you do want to get
credit again, follow the advice above, and within six months to a year following
you'll be back in business again.
For more information about what you can do about a variety of legal items,
I recommend going to http://www.nolo.com
and looking at their website which has a lot of good, free legal advice, and
plus several great books on bankruptcy, credit, student loans, etc.
I am not a lawyer, thus, if you have questions, about this please check with your attorney. Thanks.