Debt Management: How to Repair Your Credit Score

Your Credit Report
Establishing and keeping a good credit report and its accompanying credit score is one of the best things you can do to help insure that you will have access to credit whenever you need it. Your credit report contains information about where you live, your bill-paying history, if you’ve ever been sued or arrested or if you have ever filed for bankruptcy. Consumer reporting companies send the information contained in your report to different types of creditors, insurance companies, prospective employers and other business that have a legitimate need for it. As you can see, your credit report is a documented record of your financial life.

Your Credit Scores
Credit scoring is a system that creditors use to determine whether to extend credit to you and how much interest to charge you for doing so. Your bill-paying history, outstanding debt, the number and types of accounts that you have, late payment history, collection agency actions and other financial information make up your credit report. Using a statistical formula, creditors compare this information to the credit information of consumers who have similar profiles to yours. This credit scoring system awards points for each pertinent financial factor. The total points, your credit score, helps predict how good of a credit risk you are. This number helps determine how likely it is that you will repay any loans in a timely and responsible fashion. Consumers who have high credit scores are nearly always good credit risks.

Repairing Your Credit Score

Correcting Inaccurate Information in Your Credit Report
Under the Fair Credit Reporting Act (FCRA), both the consumer reporting company and the information provider are responsible for correcting any incomplete or inaccurate information that appears in your credit report. If you discover inaccurate or incomplete information about your financial history on your credit report, you will need to contact both the reporting company and the information provider. You need to do this in writing and you should include copies of any documents that support your position. Your letter, which should be sent via certified mail with return receipt requested, should clearly identify each item in your credit report that you are contesting and why you are disputing them. It is very important that you keep copies of all transactions.

Consumer reporting companies must investigate your claim, normally within 30 days, unless they deem your dispute frivolous. They must then send all of your relevant data to the organization that initially provided the information. At that time, the information provider must review the information and report the results back to the consumer reporting company. If the information provider agrees that the disputed information is, indeed, inaccurate, it must notify all three nationwide consumer reporting companies so the information in your file can be updated and corrected.

Upon completion of the investigation, the consumer reporting company must provide you with the written results and a free copy of your credit report and score if your dispute resulted in any change. Upon your request, the consumer reporting company must also send notice of corrections to anyone who received your credit report during the past six months.

Negative Information in Your Credit Report
Unfortunately, when negative information that is correct appears in your credit report, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for ten years. There are additional parameters for how long certain other activities can remain on your credit report.

Free Credit Reports Online
It is important for your debt management that you keep up-to-date on your credit scores. Your credit score is an indication of how well you are managing your financial life. It is also extremely important to know your credit scores and the contents of your credit report before you apply for any new loans, refinancing or lines of credit. You are entitled to one free credit report annually to review this information. To get this free report, go to www.annualcreditreport.com. Other websites that claim to provide free copies of your credit report may prove to be less than legitimate.

For more help in improving your credit scores and money management online, please take a moment to fill out the form on the bottom of this page to speak with a member of our professional debt consolidation staff. You will be happy that you took the time to secure your financial future.