Repair Your Credit
How’s this for a nightmare scenario - your car broke down for good, and you desperately need a loan to buy a new one. You go to the bank, confident in getting a good rate. After all, you pay your monthly bills on time and your mortgage is average for your lifestyle. However, after a credit check, the bank manager refuses to lend you the necessary funds. You leave the bank, shocked and embarrassed. What happened?
In all likelihood, you have a bad credit report. All the information in your report is statistically collected into a score, and this score was uncomfortably low for the loan officer. What do you do, and what the heck is on your report to warrant such a rejection?
Your Credit Report and the Law
By law, you are allowed to order a copy of your credit report for free, once per year, from each of the three main credit bureaus. These bureaus are in the business of collecting all the financial information about you and sell this information to institutions and people who wish to know your financial history. These people include bankers, insurance companies, potential landlords, potential employers, and anybody else who needs to make sure you are financially reliable. If your credit file is inaccurate, it reflects badly on you. Fortunately, your credit report is not set in stone. By law, you are allowed to dispute any item in your file.
Click to learn how to order your credit reports.
Once You Get Your 3 Credit Reports
You will want to order a copy of all three, since different financial institutions subscribe from different agencies. Each agency collects your credit information a different way. Your information isn’t verified - it’s all collected from creditors, who may not send info to all the credit agencies, but only the one they most often deal with. Thus, all three reports will likely be very different, and are bound to have errors.
Scan through each report, circling each item that is wrong or unfamiliar to you. Information goes back seven to ten years, and inquires on your file (which also negatively affects your score) is kept for two years. Note that if the information is old, ask the particular agency’s report to remove it. Take note of any accounts you may have opened, those you have closed, bankruptcies, unpaid or late bills (did you, in fact, pay them on time?), and any other financial information.
You will very likely find information you can dispute. Once you do, the next step is to begin the dispute process.
Disputing Your Credit Report - Do it Yourself Or Hire a Credit Repair Service
You can easily do this yourself, however, there are reputable credit repair services who have attorneys to make your case on your behalf. If you decide to do it yourself, it will take some work, letter-writing skills, and a trip to the post office.
Document each item you think is in error, and be prepared to dispute it with backing documents. If you do not have the necessary documents, you can still dispute the item. The credit bureau must then prove the item with their own supporting documentation, and if they do not have it - which they won’t, if it is a genuine error - then they must by law remove it.
If you have a negative item on your report that is accurate, such as a late payment or a loan default, nothing but time will repair your report. Contrary to some “too good to be true” advertisements from credit repair services promising to erase your bad credit, “GUARANTEED!”, there is no way to remove accurate, negative information in a credit report. Such strategies to erase bad credit are ill-advised, may be illegal, and could even be an outright scam to get your hard-earned money. A strong financial plan, debt reduction strategy and paying your bills on time is the best way to improve your score.
Once you have documented all the information on your reports that you believe are either inaccurate or just plain wrong, you can either write a letter to the appropriate credit agency who sent you the report, or order a dispute form through them.
Writing Up a Credit Dispute
Following is a sample credit report letter requesting changes to your credit report. To receive a better response, always include copies of any financial documents as proof of the error. Examples of documents include paid off loans, court documents, and any receipts and invoices that are stamped as being paid. Bills paid online will have a confirmation number. Items that you did not authorize may be a sign of either a simple clerical error or the warning signs that a thief may have stolen your identity and is opening accounts in your name.
View a sample letter below, or check out an excellent credit repair service with paralegals and attorneys on staff who will do this for you.
Sample Letter to Dispute an Item on Your Credit Report
Sections in ** are optional sections, depending on your request. Sections in () parentheses are for your information only.
Your Name
Your Address
Your City, State, Zip Code
Complaint Department
Name of Credit Bureau or Company **see above for addresses**
Address
City, State, Zip Code
Dear Sir/Madam:
I have obtained and studied a recently copy of my credit report, and I have found incorrect or inaccurate information in my file. Please investigate and remove the following items I have circled on the attached copy of the report. Respond within 30 days of your receipt of this request.
**For Personal data inaccuracies**
My personal information is incorrect:
Incorrect:
(Enter your incorrect information)
Correct:
(Enter your correct information)
**For credit account errors**
This item should not be on my file: (The item, including creditor name such, item type and account number. Write why it should be removed - it is inaccurate, too old and should be removed, or it is an item you never heard of)
(The item, including creditor name such, item type and account number. Write why it should be removed - it is inaccurate, too old and should be removed, or it is an item you never heard of)
**For credit account inaccuracies**
This item is inaccurate: (Plural if you have more than one)
(The item, including creditor name such, item type and account number. Write why it is wrong and how it should be corrected. Include proof.)
**For credit inquires you believe should not exist**
The following inquiry should not be in my file: (Plural if you have more than one)
(The creditor name and the date of the inquiry. Write why it should be removed, such as too old (over 2 years), it was never authorized, or you have never heard of them.)
I have enclosed copies of all required proof and documentation supporting my position. Please correct these errors as quickly as possible and send me an updated credit report.
Sincerely,
(Your signature)
(Your printed name)
Enclosed: (Complete list of the copies of documents you are enclosing within your letter. Remember, keep copies for yourself!)
Send your letter via registered mail, so you will have signed proof that the document arrived.
Copy and paste this sample credit repair letter into a Word document
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