Guide on how to fix bad credit

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Under the federal Fair Credit Reporting Act (FCRA), credit reporting agencies like Equifax, Experian, and TransUnion are responsible for correcting information on your credit report that is inaccurate or outdated.

An important first step to correcting such errors is to order your credit report, which, by law, you are entitled to receive for free once every 12 months, upon your request. The easiest way to get a copy of your report is to submit an application online at Annual Credit Report website or over the phone, by calling 1-877-322-8228. Once you receive your report, you can review the document for any inaccurate and potentially negative information.

The next step in disputing errors in your credit report is to notify the credit reporting agencies in writing of the specific information you have identified as outdated, incomplete, or simply incorrect. Before mailing your letter, make sure to also include copies of any supporting documentation, along with detailed explanations on the reasons for your dispute. The Federal Trade Commission recommends sending a copy of your credit report that shows items you are disputing either circled or highlighted. It's also a good idea to make copies of your letter and all additional documentation before you mail it. In addition, the FTC advises consumers to send their disputes via certified mail and to request a receipt. Taking this extra step will let you know when your letter and other important materials are received by the credit reporting agencies.

By law, credit reporting agencies are required to investigate claims within 30 days of receiving a dispute. But be aware, these agencies can and do decide some disputes or claims are too frivolous to investigate.

Negotiate with your creditors

Although this option may sound intimidating, communicating with your creditors can actually be a beneficial step in the process of repairing your credit. Most creditors prefer to help consumers pay their balances instead of having them default on their loans or credit card payments. In addition, creditors may be willing to remove negative listings they have added to your credit reports in exchange for payment.

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