Credit is becoming increasingly important in today’s society. Good credit most often will allow savings on everything form mortgage loans to car insurance rates as well as creating possibilities for acquiring loans for auto purchases and, of course, mortgage loans. Poor credit, however, will negatively impact your life in an opposite fashion. There are numerous companies which provide credit repair services but it is also possible to repair your own credit, many times with better results, if one adopts a sound credit repair strategy.
The first step in any credit repair process is debt validation. This is obtaining your credit history from the three major credit reporting agencies, Equifax, Experian and Trans Union. Upon receiving these reports read each and every item in the reports. Look for any errors or discrepancies. If there is anything that you think is on your report that shouldn’t compose a letter to the corresponding creditors asking for debt validation. If they do not supply you written proof of the debt within 30 days they are obligated to remove the entry from your report and supply documentation to this effect.
After you have removed any false information from your reports write down all remaining outstanding debts. Get in communication with any collection agencies that show up on your report and formulate a payment schedule with each one. Make sure it is within your means. Also ask if they will contact the credit reporting agencies to remove the negative entry after you have paid the account in full. They are generally amenable to this provided you fulfill your payment commitments.
While you are paying off your debts, according to the schedule you have set up, you can also begin to establish new credit. One way to do this is to set up a secured credit card with your bank or credit union. This is done by depositing an amount of money, which serves as collateral for a credit card with a limit equal to the amount you deposited. It functions the same way as a debit card but is actually a credit card and will show up on your credit report as such. Every month make a nominal expenditure on the card and repay it immediately. In doing this you will show a positive payment entry each month for the card in question.This will steadily increase your score.
Repairing your credit will prove to be worth the time and energy you put into it. Many times over, in fact. Not only will it allow you to get loans for very expensive purchases, such as a new auto or, perhaps, your dream home, but an improved credit score will save you money. The interest rates lenders levy on loans are a direct result of your credit score. A high FICO score will result in much lower interest payments on almost any credit you apply for. But there are other less obvious ways that a good credit score can benefit you. Your car insurance rates, your apartment rent, and many others can also be affected by your credit score.
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