What is DIY credit repair?
DIY credit repair entails repairing your credit on your own by getting in touch with creditors and credit bureaus to dispute and challenge errors. You can do this entirely on your own or you can handle some of these things yourself while using a credit repair service for others.
How Can I Fix My Credit on My Own?
The steps involved in repairing and improving your credit are the same whether you do it yourself or use a credit repair service. In essence, they entail obtaining your credit report and methodically correcting errors that are harming your credit score.
Get a credit report first
Get a copy of your credit report as soon as possible so you can see what needs to be fixed. Each of the major credit bureaus must provide you with a free copy of your credit report once a year, and additional copies can be ordered through AnnualCreditReport.com. Additionally, you can access free updates to your Vantage 3.0 credit score every 14 days here.
2. Check your report for unfavourable information that can be disputed.
Reviewing your report for unfavourable items that can be contested is the next step after receiving it. Look for things like:
- Inaccurate personal information, including names and addresses
- Accounts that provide false information
- redundant accounts
- lost accounts
- Delinquencies or late payments
- false information about missed payments, bankruptcies, or foreclosures
- Criminal activity
- Accounts that you closed rather than the provider (listed as "closed by grantor")
- You might be surprised by what you discover because a sizable portion of credit reports are inaccurate.
3. Contact Credit Bureaus and Creditors to Dispute Negative Items
The next step is to dispute any items you think are open to review. You can contact the three major credit bureaus through their websites, by phone, or by mail.
Experian
P.O. Box 4500
Allen, TX 75013
800-916-8800
https://www.experian.com/blogs/ask-experian/credit-education/faqs/how-to-dispute-credit-report-information/
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374-0256
866-349-5191
https://www.equifax.com/personal/credit-report-services/credit-dispute/
TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19016-2000
800-916-8800
https://www.transunion.com/credit-disputes/dispute-your-credit
You should also contact the creditor or lender involved in the dispute. They may be able to correct an item for you. The correction may take 30 to 45 days or more to appear in your updated credit report.
4. Make all payments on time going forward and pay off any past-due items immediately.
Paying off items that were paid late should be a priority when working to improve your credit score because late payments can have such a negative impact on a person's credit score. Pay off any past due items as soon as you can, and make it a habit to pay your bills on time going forward. The longer past due payments remain unpaid, the more damage they do to a person's credit score.
You may be able to arrange for items that have been sent to collection agencies to have the account reported as paid in full in exchange for a full or partial payment agreement. This type of arrangement is referred to as "pay for delete," and it is possible that you will be granted this request. A pay for delete arrangement, on the other hand, does not automatically remove an item from your report; rather, it merely indicates that you have made arrangements to pay your debt. Even though creditors may view the item on your credit report more favourably as a result of this action, the item will not be removed completely. If you decide to pursue a pay-for-delete arrangement, you should make sure that the collection agency provides you with a written agreement before proceeding. Otherwise, you run the risk of the agency keeping your money but failing to report that they have received payment.
5. Reduce the Outstanding Amount in Accounts That Have a High Balance
One more significant factor that can bring down your credit score is having a high balance, and reducing that balance can be one way to work towards improving your score. When paying down balances, be strategic. Think about how much of your available cash you can put towards paying down your debt without throwing off your financial plan. In order to ensure that you have sufficient funds for all of your other monthly bills and expenses, it is recommended that you do not devote more than twenty percent of your monthly income to the repayment of your debt. On the other hand, this is subject to change depending on your circumstances.
Also, think about which outstanding balances you ought to pay off first. In the long run, you can cut costs and save money by reducing balances on credit cards with high interest rates. You could, as an alternative, choose to pay off credit cards that have low balances so that you can track your progress and feel like you're making headway.
6. As your credit score rises, gradually open a variety of new accounts of different types.
If you follow the steps above, you should see an improvement in your credit score. When your credit score improves, opening new accounts can help boost it further, particularly if you have a limited variety of debts represented in your credit portfolio.
Nevertheless, resist the temptation to use your improved credit to apply for an excessive number of new accounts. Doing so can have a negative impact on your credit score. Instead, you should be picky about the different kinds of credit for which you apply, and you should open new accounts gradually. For instance, a multitude of financial institutions provide unsecured credit builder loans that are simple to qualify for and are intended to assist you in reestablishing your credit.
7. Keep all of your accounts active.
Because the length of time your accounts have been open is a factor in determining your credit score, maintaining an active account balance can help your score improve. Once you've established a new account, you shouldn't close it unless there's a very good reason to do so. However, if you do not actively use an account, you should make sure to monitor it on a regular basis to ensure that you are not being charged any fees that are detailed in the account's fine print.
When it comes to your credit report, how long does negative information remain?
The information contained in a credit report is categorised as either "positive" or "negative." Items such as rent and utilities being paid on time are examples of positive information. Inaccurate or late payments, collection actions taken by a third party, loan defaults, personal bankruptcies, and property foreclosures are all examples of negative information.
In most cases, negative information will stay on your report for a period of seven years. Nevertheless, this varies with different types of unfavourable items, including the following:
- After the initial date of delinquency, there is a seven-year grace period for late payments.
- Negative information stays on your credit report for seven years after the first missed payment, even if the creditor has charged off the debt as a loss and written it off as a "charge-off" or has referred the account to a collection agency.
- When it comes to bankruptcies, adverse information can stay on your credit report for anywhere from seven to ten years, depending on the type of bankruptcy.
- Other derogatory accounts, such as repossessions, can stay on your credit report for up to seven years after the initial payment was missed.
- Closed accounts that have been paid in full and in accordance with the terms of the agreement can remain on your credit report for up to ten years after the creditor first reported the account.
- Open accounts that have been paid in accordance with the terms of the agreement will not be closed as long as the account is open and the creditor continues to report it.
Furthermore, hard inquiries into your credit score can stay on your report for up to two years after the inquiry has been completed.
Is it Possible to Have Unfavorable Information Removed from Your Credit Report?
Although you cannot remove negative information from your report, you can ask the credit bureaus or your creditors to remove negative information that is inaccurate. You are unable to have inaccurate negative information removed from your credit report if it has not been there long enough to be eligible for deletion due to the passage of time. You do have the ability to request the removal of certain types of negative information, including the following:
The information that has been included in your report for such a long period of time that it ought to have been removed automatically
The information that is presented in a number of different instances
Those things that go wrong as a direct result of identity theft
You may be able to negotiate a "pay for delete" arrangement with a collection agency in order to have the agency accept a payment of your debt in exchange for reporting that your account has been paid in full. This arrangement pertains to items that have been turned over to the collection agency. This will not remove the delinquency from your report; however, it may lessen the impact of the delinquency and cause financial providers to view you as less of a risk for credit.
Tips for Do-It-Yourself Credit Repair
What steps should you take if you make the decision to fix your credit on your own? Following the steps outlined here will help you improve your credit score.
1. Obtain a copy of your credit report.
Getting a copy of your credit report should be the first thing you do because it will tell you exactly where you stand. AnnualCreditReport.com is the place to go to get a free copy of your report. You also have the option of signing up for free updates on your credit score once every two weeks through this site.
2. Argue and bargain regarding unfavourable aspects
When you have your credit report in hand, you are in a better position to spot inaccurate negative items, contest them, and challenge them. You may be able to negotiate a partial payment for accurate items that have been referred to collection agencies in exchange for a report that your debt has been paid off in full if you do so quickly.
3. Be prompt with payment of bills.
If you want to improve your credit score, one of the most important things you can do is make it a habit to pay your bills on time. It is possible that you will find it beneficial to automate some or all of your bill payments in order to reduce the likelihood of forgetting when payments are due. If you're having trouble paying all of your bills, you should look over your budget and see if there are any expenses that you can eliminate.
4. Reduce the Percentage of Your Available Credit That You Use
Your credit score can improve if you reduce the percentage of available credit that you use. Make it a goal to keep your balances at or below 30 percent of your available credit, with a lower percentage representing a better situation. If you are able to do so, you should pay more than the required minimums.
5. Always maintain active bank accounts
The length of your credit history has a direct correlation to the potential increase in your credit score. You can raise your credit score by maintaining open accounts and allowing them to age.
6. Make an application for a secured loan or credit card.
Applying for a large number of new accounts at once can have a negative impact on your credit score; however, applying for a secured credit card or loan can help you improve your score. You can demonstrate that you are capable of good credit management by obtaining a secured credit card or loan and diversifying the types of credit you use. Think about having a conversation with your bank to find out if they offer any credit builder options that are suitable for someone in your position.
7. Give Consolidation of Debts Some Thought
If you owe money on multiple accounts, each of which has a high balance and a high interest rate, consolidating your debt may be an option for you that will lower your overall credit utilisation while simultaneously improving your ability to pay your bills on time. The process of combining several different debt obligations into a single monthly payment is known as debt consolidation. You can accomplish this goal by applying for either a credit card that offers 0% interest on balance transfers or a debt consolidation loan that has a fixed interest rate. Your other debts are paid off with the money you received from your credit card or loan, which results in a lower percentage of your available credit being utilised across all of your accounts. In the meantime, you can consolidate all of your monthly debt payments into one payment, which will make it much simpler for you to make all of your payments on time.
You need to have a credit score that is high enough to qualify you for a balance transfer credit card or a debt consolidation loan in order to implement this strategy successfully. In addition to this, you need to make sure that the reduced amount of money you owe will be an amount that is manageable for you to pay back. Additionally, if your balances are low enough that you can pay them off in a short amount of time, you may benefit more from this solution than you would from consolidating your debt. Before making the decision to consolidate your debt, you should first consult with a financial advisor and carefully consider all of your available options.
8. Obtain an Increase in Your Credit Limit
The percentage of your available credit that you actually use can also be reduced by increasing your credit limit. As your credit score rises, you may receive offers to request an increase in your credit limit or you may qualify for an increase in your credit limit automatically. Before applying for a raise, you should evaluate your likelihood of being granted the new amount based on your current credit score. If you have seen an increase in your income, this may also improve your chances of being approved.
When Should I Do It Myself to Repair My Credit?
It is possible to repair your credit on your own. And any credit repair company that is worth its salt will tell you that.
According to Padawer, "If your circumstance is straightforward, and all you have are one or two glaring inaccuracies, you might want to consider performing a round of credit repair on your own."
When you are attempting to fix your credit, make sure that your disputes with the three major credit bureaus are clear and to the point. And get your documentation in order. You have the option of sending a dispute letter through the mail or submitting it online through the websites of each of the credit reporting agencies.
Keep in mind that you are required to file a dispute regarding each error with each bureau. Your credit report will not be cleaned up by any of the bureaus that compete with it! Discover more information about credit repair here.
If you decide to hire a credit repair company or a law firm, such as Lexington Law Firm, to assist you in repairing your credit, you should make sure that the company you are working with has a good reputation and is ethical.
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