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By information.com — Published September 26, 2017
A bad credit can make your life much more difficult than it should be. Your credit reflects how well or in some cases, how poorly you handle your finances. If you pay your bills on time, pay off your debts regularly, and have little to no credit card balances, you will have good credit score.
On the other hand, failing to fulfill all these financial requirements will leave you with bad credit which makes it difficult to do anything at all. Renting an apartment, buying a car or house, buying or receiving insurance, applying for loans and credit cards are close to impossible if you have bad credit.
Companies and banks hardly do anything before checking your credit score as a security measure, and through the years, this number will likely increase. Plus, a good credit opens up more opportunities for employment and promotions/growth. So it is of utmost importance that you maintain a good credit score, and if you have bad credit, it is recommended that you fix it immediately.
Despite the many advertisements you may have seen on credit repair agencies, you yourself can do the exact same thing they do free of cost. Here is how.
Get your hands on the latest credit reports for free
The first step is to get the latest copies of your credit report to understand where you have been going wrong. You can get free copies of your reports from all the three credit bureaus every year. You can go to annualcreditreport.com for this year’s report, or order by mail or phone if it is more convenient for you.
If you have run out of free credit reports for the year, you can pay a fee and get it from any of the credit bureaus. Make sure you get the three-in-one credit report, instead of just a single report, or buying them individually. It is important that you get all three reports so that you can repair your credit in all three bureaus, as information may be filed differently in each.
Carefully go through your reports for errors
Once all three credit reports are in your hands, spend time to go through all of them carefully. It may take you days to finish assessing everything, but a meticulous assessment is required.
The information filed in your reports may look similar even if they are from different bureaus, but go through each one cautiously. If you find any incorrect information regarding accounts that do not belong to you, incorrect report of payments, maxed out accounts which cross your credit limit, etc.
Dispute any errors you find in your report
By law, you have the right to dispute information that you find to be inaccurate or incomplete in all three of your credit reports. You will be given instructions on how to dispute information on your credit report when you order them. You can either make disputes online, by mail or phone.
Often, disputing by mail is most convenient. You can attach any proof you may have that you believe will support the dispute you are making, and you can keep copies of your dispute letter should you ever need to produce it later.
When sending a dispute, remember to include a copy of your credit report with the incorrect information highlighted and any proof you have that backs your claim. If your dispute is found to be legitimate, the necessary changes will be made in your credit report and other credit bureaus will be made aware of this.
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Effectively deal with past due accounts
Your credit score is highly affected by your payment history. In fact, it impacts 35% of your credit score. What this means is that your score will be negatively affected if you have any past due accounts. Make sure that tackling such accounts is your priority. If you have your past due accounts reported as “paid” or “current”, you can easily fix your credit score.
If your payment is due by 180 days, your account status will be labeled as a charge-off. Make sure you pay the due amount as soon as possible to avoid this. The further behind you are on your payment, the more you will have to pay.
In case your account is already charged off, you will still have to pay. Even though the effect on your credit score will be less as your balance gets older, it will be much more difficult, sometimes even impossible to apply for new loans and credit and receive approval. So make sure that paying your charge-offs is a priority in your process of repairing your credit score. If you can get a desirable account status after this, that’s even better.