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How to rebuild your credit
Bankruptcy, collection accounts, judgments, liens... negative credit
report records can happen to anyone. With a little hard work, you
can improve your credit even before these negative records expire
from your credit reports. Here are five easy steps you can take
to rebuild your credit:
Step 1: Survey the Damages
The first step to rebuilding your credit is to look at exactly where
you stand. Don’t skip this step because you think you already
know what is on your credit reports or are scared to see what may
be reported. Bite the bullet and order all
three of your credit reports and all three of your credit scores.
Print each report and review it closely. Highlight any negative
records or inaccuracies that are damaging your credit score. Are
all the accounts listed accurate?
Step 2: Check the Expiration Dates
By law, negative records must remain on your credit reports for
7-10 years. The specific expiration date varies depending upon the
type of record. Paying off an old collection debt or discharging
your bankruptcy does not remove these records from your credit reports.
Look up the exact
date that each of the negative records on your credit reports
is set to be removed. You will likely see a major improvement in
your credit scores when these records expire.
Step 3: Dispute the Errors
If you find inaccurate records, fraudulent accounts, or records
that should have expired on your credit reports, you have the right
to dispute these errors. You'll need to send a separate dispute
letter to each of the credit bureaus to correct your Equifax, Experian,
and TransUnion records. Read
more about how to dispute inaccuracies on your credit reports.
Accurate information cannot be removed from your credit reports
and it is a waste of time to attempt to dispute these records.
Step 4: Start Adding Positive Information
Since there is no way to remove accurate negative information from
your credit reports, the best way to improve your scores is to add
new positive information. Open up a new credit
card (or a secured
credit card) and use it responsibly each month. Keep your
balances low and always pay your bill on time. By using credit responsibly,
you are building a new history of good credit behavior on your credit
reports. Over time, you may want to open additional credit card
accounts or obtain a loan
to boost your credit scores even higher.
Step 5: Monitor your Progress
It's easy to keep track of your credit score improvement with the
new types of credit monitoring programs available today. Instead
of just giving you occasional access to your credit report and email
alerts, these new credit monitoring programs include unlimited
access to your credit reports and credit scores, identity
theft insurance, daily alerts, and more. Your credit scores should
improve steadily as you continue to use credit responsibly and add
new positive information to your credit reports.
Quote of the Month
Opportunities
to find deeper powers within ourselves come when life seems most
challenging.
- Joseph Campbell
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