Seven Steps to Repairing Your Credit Report

“Credit” is an illusory term. The swipe of a card, the arrival of a bill, and perhaps a late payment here or there is where the commitment stops for many people. In a paperless world, it’s easy to ignore credit blunders and the damage done to your credit report. After all, you aren’t required to see it or even know what it contains. If you are struggling with denied loans and late payments, the time to face the music has arrived. Follow the steps below to fix your credit report. Your efforts could save you from a mountain of trouble.

  1. Get the facts. If you haven’t seen a recent copy of your credit report, now is the time. Lexington Law offers a free copy on our website in addition to free consultation services. Our paralegal staff will begin by helping you:
    • Spot the basic errors. Credit repair takes work, but you should also let the facts work for you. When reviewing your credit report, verify the following information:
      • Your full name, spelled correctly
      • Your birthday
      • Your current address and past addresses
      • Your Social Security Number (SSN)
      • If applicable, your spouse’s full name, spelled correctly
      • Names associated with your credit information, such as cosigners and authorized account users
    • Find the more glaring errors, such as:
      • Identity theft. Credit card companies have bulked up their efforts to ensure account safety, but identity theft is still possible. If you don’t recognize an account or purchase, call the company to get more information. They can put a temporary hold on your card until the issue is sorted out.
      • Duplicate reporting. Double the loan, double the trouble. Duplicate listings can throw your entire report off its axis, increasing your debt-to income ratio and potentially lowering your score. For example, when one debt collection agency sells a charged-off account to another debt collector, one bad debt can look like two or even more.
      • Falsely active accounts. Just as volatile as duplicate reporting, closed accounts that appear open can throw a wrench into your credit repair efforts. Make note of those long-dead accounts—the credit bureaus should know the wake is over.
      • Inaccurate credit limits. Debt utilization is a defining factor in any credit report. It calculates how much debt you have against your overall credit limit. Without the right numbers, it could appear that you are overextending. For example, Iris has three credit cards with a $12,000 overall limit. As a responsible spender, she tries to keep her utilization ratio below 25 percent (i.e., $3,000 in debt or less). Unfortunately, the credit report mistakenly reported her overall credit limit as $8,000. The mistake puts Iris’s utilization ratio at 37.5 percent; much higher than it should be. This error could instantly lower her credit score and affect her ability to get new credit.
      • Unfairly reported negative items. Creditors are obligated to demonstrate that they have reported their information in alignment with applicable consumer protection statutes. When they haven’t, they must edit or remove the offending material. A credit repair law firm can assist in that regard.
  2. Accept the facts. Reviewing your credit report may be difficult, especially if your past isn’t exactly glowing. The good news is that you can start fresh by establishing good habits now. The bad news: Fair and accurate information cannot be removed from your report. Unfortunately, there are no shortcuts to ethical credit repair. It’s important to accept the blunders you cannot erase and work to fix the ones you can.
  3. Stop in your tracks. In the spirit of establishing good habits, the best time to start is today. Put down the credit cards, and pick up your budget. Make a list of your necessity spending versus recreational spending. Cutting back will put you in a better position to affect change in your credit report, boosting your score in the process.
  4. Accentuate the positive. Payment history accounts for 35 percent of your credit score;. Unfortunately, many companies fail to report customer credit information. Put your best foot forward by ensuring that positive accounts are included in your credit report. Consumer laws allow you to add missing accounts to your report if needed. Call your creditor, and notify them of the oversight and ask them to report your account to the credit bureaus. A good customer deserves the rewards of good credit.
  5. Do the leg work. You have completed your credit report research, so now is the time to act. Start by:
    • Investigating or even disputing unfair or inaccurate information. In this regard, a credit repair law firm may be able to assist.
    • Paying down debt. Take a look at your accounts and make a plan to proactively reduce your debt. Consider the amount, interest rates, and time it will take. The process may be slow, but the effort is worth it.
    • Contacting your creditors. If obliterating overdue accounts isn’t a possibility, call your creditor and explain the situation. Ask for a temporary forbearance or reduced payment plan. Many companies are open to helping communicative customers during hard times. Also, confront examples of unfair credit reporting by abusive creditors and exploitative third-party debt collectors.
    • Get some help. Credit report and scores got you down? Ask for some help if you are feeling overwhelmed. Consumer advocacy law firms like Lexington Law offer services and education to guide you through the process. While you have the option, you certainly don’t have to tackle credit repair alone.
    • Plan for the future. Credit repair isn’t a temporary act. Rather, it is a long-term commitment to financial health. Keep your credit report clean by paying your bills on time, managing your open accounts, opening an emergency savings account, and improving your financial education. Credit is a valuable asset, so use it to your advantage.