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HOW TO REPAIR YOUR CREDIT
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1. Order your free credit reports.
Find out what the top three credit bureaus -- Equifax, TransUnion and Experian -- are saying about you. It's likely that they're all slightly different.
Thanks to a new federal law, you are now entitled to one free credit report from each of the credit reporting agencies per year. The reports will not automatically be sent out. Each consumer must request their reports. To order yours, Go to annualcreditreport.com, which is the only authorized source for consumers to access their annual credit report online for free. Or you can call (877) 322-8228.
2. Dispute errors.
When you receive your free report, examine it carefully. Nearly every consumer has an error on at least one credit report at a given point and time. Carefully look for everything from typing errors, outdated and incomplete information and inaccurate account histories.
If you find errors, you can either complete the dispute form provided with your credit report or write a letter. Clearly identify each mistake and state why it's wrong. A recommendation is to send a photocopy of your credit report with the mistakes circled to the reporting credit bureau. Include copies of supporting documents. The credit bureau must investigate any relevant dispute within 30 days of receiving your letter. Any item that is not verified as accurate by a creditor is removed.
If the credit bureau makes any changes to your credit file, it will send you the results and a free, updated copy of your credit report. Once a negative item is removed from your report, the credit bureau cannot put it back on unless a creditor verifies its accuracy and completeness -- and sends you written notice.
3. Negotiate with creditors. Then pay off your balances, one at a time.
Unpaid collections are worse than paid collections. You can negotiate a payoff settlement that reduces your bill, plus demand that all derogatory remarks are removed from your credit report or at least reported as paid in full. Be sure to get agreements in writing before sending off your payment.
Any correct negative information may remain on the report for no more than seven years from the date of the last activity. Bankruptcies may be reported for 10 years.
4. Maintain credit accounts.
Slowly close out unneeded or unused credit accounts. Most experts recommend carrying between two and four major cards. But, be cautious when canceling because closing accounts can negatively impact your credit score, commonly called a FICO score. FICO considers the ratio of total debts to total available credit. A good rule of thumb is to keep your revolving debt to 50 percent of your available credit.
5. Get help.
There are many credit counseling agencies that can help you write letters and work with creditors to negotiate down your debt and put you on a manageable payment plan. If you don't feel comfortable tackling the creditors on your own, find a reputable credit repair agency in your area. Research these companies carefully to ensure that you understand the service that they are providing and the fees involved.
Click Here to Register for our FREE Credit Repair Seminar
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