There is nothing worse than applying for some form of credit, whether online or in person, and being told that your application is denied.
Scratch that...there is something worse than being told that your credit application is denied...NOT BEING TOLD WHY IT WAS DENIED RIGHT THEN AND THERE! I personally hate those "You will get a letter in the mail in 5-7 business days on the factors of our credit decision" from an online credit application, or the "Sorry, the application did not go through, so your total is $XYZ.AB", from the sales clerk who talked me into applying for the freaking store card in the first place and gassed me up on the perks and rewards just to charge me the full price anyway and ding my already low credit score even lower.
They don't call it a hard-pull for nothing!!
Or thinking your ready to take that big step and purchase your first home, only to find out that Tom, Dick, and Harry is all up and down your credit report listing everything under the sun you owe them! So your loan officer looks at you and tells you that you have a bit of cleaning up to do on your credit and nicely sends you out the door, but at least you can keep the company pen as a parting gift!
At this point you know you need to do something about your credit, but you just don't know where to start. Well, your in luck! I will share with you a few simple steps to fix your credit report and increase your credit score, all while saving you money from using a credit repair company to fix it for you!
First things first, you, nor anyone else, can LEGALLY remove negative information on your credit report that is being reported accurately…meaning the bad account actually belongs to you!
However.....you can LEGALLY remove negative accounts that are NOT being reported accurately! These errors being reported do affect your credit score which is a violation of your consumer rights under the FTC and FCRA! ( We will talk about these below)
So before we get the ball rolling, lets make sure we are familiar with some terms that you will see throughout this entire post.
1. What is credit?
Credit is trust given to another person for future payment of a financial obligation, such
as loans, lines of credit, etc.
2. What is a credit score?
A credit score is a 3-digit number ranging from 300-850 that helps a lender predict how
likely an individual is to repay a loan or make credit card payments on time.
3. What is a credit report?
A credit report is a detailed breakdown of an individuals' credit history prepared by the a
4. What is a credit bureau?
A credit bureau is a company that collects information relating to the credit rating of
individuals and makes it available to credit card companies, financial institutions, etc. The
credit bureaus sell the information in your credit report to creditors, insurers, employers,
and other businesses that use this information to make decisions about your credit
worthiness when you apply for credit or financing. There are many credit bureaus out there
that reports your credit history to creditors, however, the 3 main consumer reporting
agencies that most lenders and creditors use are Equifax, Experian, and Transunion.
5. What are my consumer rights?
Your consumer rights are laws put in place by the Consumer Financial Protection Bureau (
(CFPB) that protects you against unlawful practices when it comes to credit reporting,
credit monitoring, credit repair, and debt collection. Some of these laws put into place are:
Now that we've got that taken care of, let me show you how to fix your credit report in order to increase your credit score.
The first thing you will need is your credit report. You are entitled to a free credit report every 12 months from each of the 3 major reporting credit bureaus (Equifax, Experian, and Transunion). You can request a free copy of your credit report from AnnualCreditReport.com. Although you can get a free credit report every 12 months (or when you become unemployed, a victim of identity theft, or receiving government assistance) your credit report does not come with your credit score. You have to pay for your credit score.You can order your credit score (or sign up for credit monitoring services) from any of the 3 reporting credit bureaus, and/or sign up for credit monitoring services from a 3rd party. You can also get free credit scores, just be sure to do the proper research on these companies and make the best informed decision before signing up.
Once you receive your credit report, review the report for any incorrect information or errors. Be sure to look for the following:
1. Your current full name (and previously used name) is spelled correctly.
2. Your most current address is listed and spelled correctly. Old addresses should be
removed from your credit report for identity protection purposes.
3. Your most current phone number(s) are listed and correct.
4. Your current place of employment is listed and spelled correctly with the correct
duration dates (if listed on your report).
5. Each account listed on your credit report from the original creditor is listed correctly in
regards to the reporting date, account number, status of the account, and
remarks/notes on the account.
Example of a 3-in-1 Credit Report
After scanning your credit report and you see any errors, you will send a dispute letter to the credit bureaus clearly and specifically stating the error your are disputing and why you are disputing it (round 1 letter). This is where understanding your rights under the FCRA and FTC comes into play!
If you have a lot of collections on your account and these collection agencies calls you non-stop (at home, at work, family members, friends, employer), you can send a cease and desist letter to stop all forms of communication from that collection agency, and, work with the original creditor directly to payoff the debt.
Although this is not required, it is best to send a cease and desist letter and your dispute letter via certified mail for tracking purposes.
Although not required, it is best practice to dispute no more than 5 line items at a time with the credit bureaus if you find that you have numerous errors on your credit report. This will prevent the credit bureaus from deeming your dispute request as "frivolous" and denying your request to have the errors be investigated and removed.
Thoroughly check your credit report for errors
After you've typed up your letters and got them sent off in the mail, next you would want to document or keep track of what letters you sent and the dates that you sent them. This is very important to keep in mind, since the credit bureaus has 30-45 days to acknowledge your dispute letter, investigate the errors you want corrected, and provide an update on the results of the investigation. Each credit bureaus must provide you your full credit report (for free!) listing all accounts and all updated information on your credit report. There should also be a summary of the investigation, what they found, and what actions were taken about the dispute request.
For a collection agency, they have 30 days to acknowledge and honor your cease and desist request.
Sample Dispute Tracking Form
Stay on top of your progress in correcting your credit report! This process can take time, so you want to make sure to document and track everything each credit bureau is reporting about you regarding each negative item on your credit report.
Once you've received your updated credit reports from all 3 credit bureaus following the dispute process, check to see if the errors have been corrected. If the errors were corrected, document it on your tracking form and move on to the next items on your report that needs to be disputed for correction. If the errors were not corrected, send another letter to the credit bureaus specifically asking why the error was not corrected, ask for details on what the credit bureaus did to properly investigate the error on the account, and to re-investigate the error for correction. Document the 2nd letter that you are sending (round 2 letter) on your tracking form and be sure to request another free credit report with updates from the credit bureaus following the investigation. Like I mentioned before, fixing your credit is a process and you may get some stall or halt tactics from the credit bureaus. So again, learn and understand your rights under the FTC and FCRA to push through the stall tactics the credit bureaus sometimes use to not properly investigate an incorrect items on your credit report.
Last but not least, it is time to raise your credit score! I always advise anyone who is trying to build credit, or restore their credit, to apply for a simple $200-$300 secured credit card. Secured credit cards are the easiest and safest way to build your credit score. Find a credit card company that does not do hard pulls (decrease your credit score) when applying for a secured credit card. Before applying for a secured credit card, make sure to research what minimum credit score you need to apply for the secured card. It is best to apply for a secured card with a credit card company that accepts bad to fair credit scores, so that you do not risk having a hard inquiry (hard pull that decrease your credit score) on your credit report.
What Makes Up A Typical Credit Score?
Once you get your secured credit card, spend no more than 15%-30% of the credit card limit. Pay off your balance by the due date each month to avoid paying interest fees. Be sure to pay all other bills on time going forward to prevent any creditor from sending your account to collection to be reported as a collection account / charge-off on your credit report. Your payment history makes up 35% of your credit score, and lenders look at your payment history/behaviors to determine whether or not to extend credit to you, how much credit to extend to you, and the interest rate charged for carrying a balance.
So there you have it! The steps are pretty simple and easy to follow, it just takes time, commitment and dedication to see the desired results!
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