Having bad credit indeed, gives you that hopeless feeling. Inaccurate credit reports, which include; late payments, collections accounts and other negative information can dramatically reduce the credit score. It becomes difficult to secure an approval for loans and credit cards and even if you manage to secure an approval, you will always attract higher rates of interest charged on your credit.
The good news is that yes, bad credit status can be changed if not corrected, or in some cases, even removed from credit files. This is a breakdown of what you must know.
Credit Score: Understanding How the Numbers Work
This material will help one to better grasp the elements of credit restoration before starting the procedure. FICO and VantageScore are the most often used credit ratings; while the actual formulae are confidential, we know the main factors: FICO and VantageScore are the most often used credit ratings; while the actual formulae are confidential, we know the main factors:
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Payment history: The total mark is divided by 3 and you select 35% of the total mark. Whether you paid all your accounts on time or some of them.
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Amounts owed: 30%. This includes the percentage of your balances on your accounts compared to your credit limits.
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Length of credit history: The average discount for an item is fairly low and ranges from 10% to 15%. How many years you have been a credit holder?
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New credit: 10%. The less the total number of new credit cards that you have opened, the better it will be for you.
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Credit mix: 10%. Whether, for example, you have credit card loans, installment loans, mortgages, and any other type of loans.
In your case, it is clear that payment history and outstanding debt levels are two big factors of credit rating. If you have a track of late payments, collections accounts, charge-offs, or high utilization rates of your credit line, your score will drop. Luckily, credit bureaus are bound by law to delete or dispute the data in your reports that is inaccurate or unverifiable.
Correcting the Facts That Are Wrong in Your Credit Reports
The first thing that one needs to do when trying to check the credit report is to visit the AnnualCreditReport. com. Check for any inaccurate information that might be dragging down your score, like Check for any inaccurate information that might be dragging down your score, like:
- Such as contact numbers, email addresses, and IDs, that are not your own.
- Incorrect payment statuses
- This comprises closed accounts that are still in the credit report as open accounts.
- Balances remaining on the books more than 7 years after the date the account became delinquent
- Other information that can be misplaced includes the balance or credit limit of an account.
In case there are errors on your credit report, you have the right to dispute the errors with the bureaus. Include letters of dispute stating the parts of the report that are erroneous and any other documentation that may support your case. The credit bureaus usually take 30-45 days to investigate, so the account must have been on your credit report for a least a month. If they are in a position to unable to affirm such information, they have to exclude it from your reports.
This credit repair technique works – a study by the Consumer Financial Protection Bureau states that approximately 70 percent of entries in the credit reference lists will be removed or corrected if there is a dispute.
Negotiating With Creditors
Is it possible to request the removal of accurate negative information? It is much more challenging yet can also be done to some extent. Here are some options:
Goodwill letters: Some companies can be contacted through goodwill letters to request them to delete the late payments as a courtesy. This depends on the kindness of the person from whom you are asking directions, therefore it does not work often but is risk-free.
Pay for delete: You will find that some of the creditors will work with you and even allow you to pay the account balance without deleting the negative items. Always make sure to write down such an agreement before you part with a dime.
Debt validation: If the account is transferred to a collection agency, you can write debt validation letters where the collector has to prove that indeed you owe the money. If it’s the case they cannot prove it, they are legally not allowed to keep on reporting it.
Wait out the clock: About 90% of negative activities drop off your credit history after 7 years. On the other hand, negative items such as foreclosures, bankruptcies, and tax liens have a lifespan of up to 10 years. If inaccurate negatives are the cause, one can continue maintaining positive credit habits in a bid to bring the scores up.
Special Circumstances
Certain circumstances may legally mandate that creditors delete bad entries from your credit record, including Certain circumstances also legally mandate creditors erase unfavorable things from your credit history, including:
- Identity theft: Should an account not be created by you, notify the FTC and notify credit bureaus and other creditor reporting organizations to have the bogus accounts taken off of your credit records.
- Inaccurate defaults: Should non-adverse credit information exist, the Fair Credit Reporting Act's rules prohibit a lender from declaring that the account is in default should they not follow the required procedures. Correct the reporting mistakes they consistently bring about.
- Depending on the fact that the dates, information, or reporting rules are erroneous, bankruptcy and foreclosure removals might be taken sooner than after 7-10 years.
In other words – mistakes occur, which is why you can use the credit reporting law to request the removal of negative entries in case when creditors and credit bureaus make a mistake.
How to Rebuild Credit
And that is the reason behind maintaining active positive credit for getting your credit scores up and scrubbing your credit reports. Two key strategies can help: Two key strategies can help:
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Open new credit accounts responsibly: Requesting new credit lowers your score slightly for a short period, but identifying those ideal types of credit accounts will raise your score in the long run. However, use genuine, necessary, and optimally controlled revolving credit such as credit cards and other types of installment credits.
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Improve payment history: This is so because your recent payment track record can influence the approval or disapproval of your application significantly. If you have poor credit that is, a poor credit history, you will be demonstrating consistent on-time payments that will improve your rankings gradually without the old mistakes.
It feels like a great achievement to watch those credit scores inch up when you’ve worked hard to repair credit. It is however ill-advised to deal with credit fix companies that are overly assertive or even deceitful – you can fix credit by yourself as you learn from this guide. Check your credit status several times on free credit score tracking apps and services. If you can maintain that you are wrong in all the bad credit accounts you received, having clean payment records and newly established accounts in the good books, then you can reverse the bad credit status and achieve your financial aims again.
Call now for expert credit repair services: (888) 803-7889
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