Many credit repair services will charge you hundreds of dollars to help you clean up your tarnished credit report when you can easily do it yourself for free. And to add insult to injury, a few of them will use credit repair techniques that are unethical or even illegal! If you aren't careful, you'll end up in worse shape than you were in when you began!
Credit Repair services promise to remove all of the negative items from your credit reports, and some of them truly are bona-fide credit repair experts. But what the credit repair organizations don't tell you is that you can repair your credit file yourself, and you don't have to be a credit repair expert to do it.
That being said, if you do your homework and choose wisely, there are quite a few credit repair firms that do a very good job for a reasonable fee. Just ask for references (like past customers) and follow up with them. If you're diligent, a quality credit repair organization can do wonders for your credit profile.
The purpose of this article is to provide a starting point for those wishing to repair their poor credit histories on their own, sort of a tutorial in "do-it-yourself credit repair".
Here are the basic steps to follow for an effective do-it-yourself credit repair campaign:
1 - Get a copy of your credit report from all 3 major credit bureaus (Experian, Equifax, and Trans Union). You'll find them listed in the yellow pages. Contact each bureau and request a copy of your credit report. Expect to pay a small fee for each copy, but you can't repair your credit without them.
2 - On the back of each report, you'll find an explanation of the codes used in the file. Study these codes so that you'll know which accounts you need to concentrate on most while you're performing each step of the credit repair process.
3 - The first items to search for are what are known as "charge-offs". This means that the creditor has given up on trying to collect the debt and they have written it off as a loss. There is simply no way to effectively repair your credit without successfully getting these items removed from your credit reports.
Contact each creditor that has charged off a loan asking for re-instatement. Explain what happened to cause you to default and let them know that the problem has been fixed and you're ready to start paying on the balance due again. They'll understand that you're trying to repair your credit and likely go along with you.
Many times they will re-open the account and report it as current to the credit bureaus after they receive your first agreed upon payment. If all of your charged-off accounts are eventually re-instated and reported as current, your credit repair campaign will be doing very well indeed.
You may not be able to get all of your charge-offs re-instated however. If this is the case, contact these creditors again and request a "settlement amount". They will usually agree to accept 50% of the amount due as a settlement. Ask that upon receipt of payment, the account status be changed to "closed". Get this agreement in writing before sending your payment. Removing charge-off items are essential to a successful credit repair campaign.
4 - Next, search for late payment entries. These are usually pretty easy to clear up. Just contact the creditors and explain why you had difficulty making your payments on time. Tell them that the problem is fixed and you'll make your payments on time from now on. And make sure that you do make them on time or all of your hard work will have been for nothing!
Ask the creditors to remove the late payment entries after you have made timely payments for a period of time, say 90 days. Most will. Again, most people understand that many of us have financial difficulties from time to time and they'll cooperate and help you repair your credit.
5 - Judgments will need to be removed next. You'll have to pay off these loans in full in order to do so. Contact the lender and make arrangements to pay off the amount due with an agreement (in writing) that the judgment will be removed and the account reported as closed after full payment is made.
These steps can help you repair your credit and regain a strong financial footing. Credit repair techniques aren't difficult to understand and perform. All it takes is a little research and hard work.
Don't let the credit repair companies take advantage of you. Repair your credit on your own or choose a quality credit repair service that will work with your best interest in mind! You'll find an abundance of good credit repair firms on the web. Just be sure to select one with a good track record.
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