You've seen the ads, received the emails, and opened the letters--all of them telling you how you can "legally" repair your credit history by using credit repair services or software. The problem is that many of the tactics these credit repair consultants are suggesting are either illegal or can be done without their help for a fraction of the cost.
According to the Federal Trade Commission, we should be wary if credit repair specialists:
1. Want you to pay a fee before providing any credit repair services.
2. Don't tell you your rights and what you can do for free.
3. Recommend that you don't contact a credit reporting agency on your own.
4. Suggest that you invent a new identity by applying for a new Social Security Number or Employer Identification Number.
5. Suggest that you dispute everything in your credit report.
Many of these tactics are fraudulent, and you could even face some heavy jail time.
Action Steps
The best contacts and resources to help you get it done
Get copies of your credit reports
All three major credit reporting agencies have to provide you with copies of your credit reports on a yearly basis if you request it or when civil action has been filed against you for collection.
I recommend: Contact
AnnualCreditReport.com to obtain free copies of reports from all three agencies on an annual basis. Contacting
Experian,
TransUnion and
Equifax directly could result in your having to pay a fee for the report.
Read the reports for errors and omissions
You can dispute anything in your credit reports that is suspicious, erroneously reported or for claims that are more than seven years old. Bankruptcies can stay on your report for 10 years.
I recommend: Send a letter to the credit reporting agency disputing the entry. Enclose copies of as much documentation as you can to support your claim. The agency then has 30 days to investigate your claim, unless they consider it frivolous. Don't dispute too many claims, or they will ignore your letter and may file charges of fraud against you. For phone numbers and address of the three reporting agencies, check out
mortgage101.com. For a sample letter, go to page six of the
Federal Trade Commission's credit repair website.
Contact the creditor
Follow up by sending a letter disputing the error to the company or business that filed the claim.
I recommend: Tell the creditor or credit information agency that filed the report that you've found an error, and request that they fix it. If they prove you correct, they cannot refile the claim. Find sample letters at
CreditHealer.com and at the
Credit Infocenter.
Tips & Tactics
Helpful advice for making the most of this Guide
- Once your credit is reestablished, consider obtaining a gasoline card or a secured credit card to generate a positive credit history.
- Keep your credit card balances within 30 percent of your available credit.
- Keep requests for additional credit at a minimum. Too many inquiries can hurt your credit rating.
- A so-called "ideal" credit report should contain three-to-five credit cards, a mortgage loan and an installment loan, all showing a positive credit history for about two years.
The official source of Credit Repair is the Credit Repair page at Business.com
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