Learn How to Repair Your Credit With Our DIY Guide

Do you realize how crucial your credit report is when applying for loans, insurance and even a job?

Your credit report will influence everything from interest rates on credit cards and mortgages to premiums on your insurance! Some companies even use them to determine your level of responsibility before hiring you!

To start repairing your credit, it would be a very sensible idea to get a copy of your credit file to ensure the information it contains about you is correct, accurate and up to date.

You might think that because you've always been careful to make your payments on time that your credit report will be reflect that.

Well ideally yes, this would be the case, however it is not always that simple. Let me explain why. Your credit file is basically a running record of how well you manage credit that has been extended to you such as loans, credit cards & overdrafts. This includes any missed or late payments!

Your Credit Provider

This means your credit provider is obligated to report to the credit referencing agencies each month on the status of your accounts. If you miss a card payment for whatever reason, your provider will report this to at least one credit agency who will enter it on to your record.

Due to this system, it is possible that incorrect data can be recorded, maybe due to human error or perhaps confusion over similar names. Maybe even identity fraud! The fact is that almost 1 in 10 requested credit files are disputed for inaccurate entries.

Credit Score Chart

The credit score rating chart below is a guideline for how lenders view your score. Be aware that these charts are dynamic, so even though 750 is an ‘excellent’ score today, it might fall into the ‘very good’ range tomorrow.

Excellent 750 and Above
Very Good 720 - 749
Good 660 - 719
Fair 620 - 659
Poor 619 and Lower

Get Your Credit Report

As mentioned, the first step is to get a copy of your credit file. There are 3 main referencing agencies you need to know about.

Once a year, you can get a completely free instant credit report from the 3 main credit reference agencies - Experian, TransUnion and Equifax. Make sure you get a copy from EACH of the agencies because they will not all be the same.

Once you have these, grab yourself a cup of coffee and sit down for half an hour or so to browse through your report. They are pretty easy to understand once you look at how the information is laid out in the report. Take a highlighter and start to read through your information.

Highlight Anything Suspicious

If you come across anything suspicious, or an entry you think maybe incorrect, highlight it and move on, don't worry about it at this stage.

We need to see the bigger picture before we actually proceed with your credit repair. Ready? Let's get to work.

The same information should appear on all of the reports, however you may notice that this isn't the case. Don't worry about it though, it may just be that a particular lender prefers to report to a particular credit referencing agency and not all 3.

You may also see the names of other people who you are reported to have a financial link to, like a spouse or a business partner, but be careful and check the details.

It is not uncommon to find that you are still linked to somebody you no longer have a financial link with! As long as the link is shown on your file, their financial standing will impact on your applications. So if this is the case, highlight it.

Correct any Discrepancies

Now that you have marked any questionable or disputed entries, the next step is to get them removed. Your first point of contact will be the credit reference agency itself.

Write a letter to them explaining you believe incorrect entries are found on your credit report, explain why you believe they are incorrect and include a photocopy of the highlighted entry to speed things up a little.

Include any supporting evidence if it's required - for example if you have confirmation of a settled debt, but it still shows as outstanding. There are three major credit referencing agencies used in the US. These are Experian, Equifax and TransUnion. Here are their contact details:

Equifax
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
Experian
P.O. Box 2002
Allen, TX 75013
1-888-397-3742
Trans Union
P.O. Box 1000
Chester, PA 19022
1-800-888-4213

Generally they are quite helpful and will let you know they've received your letter and are looking into your disputes. It's then a case of waiting for a full reply.

The credit referencing agency will need to contact the creditor who made the entry, as they can't remove it without permission, so give them a little time to sort things out.

If you are looking to have another name removed from your file, they will send you a 'disassociation notice' to complete before it is removed.

You're Almost Done

In the majority of cases, a letter to the credit referencing agencies will resolve your issues perfectly fine, however if they cannot remove the entry they will let you know in writing and they'll also explain why. Normally, these cases are due to the creditor insisting the entry is correct.

Don't panic yet though, if the entry is incorrect, you have every right to have it removed, so the next step is to contact the creditor directly with your issue. Again, do this in writing and keep a record of all correspondence in case you need it at a later date.

Recommended Further Reading

Summary

It really is that straight forward! You must remember that you can't remove negative entries that are correct, you can only remove incorrect or inaccurate entries, but every step forward is a step towards building a good credit score and become credit worthy. We hope you've found our guide helpful and informative. Good luck!