Saturday, November 12, 2011

It Is Possible to Fix a Bad Credit Report?

If you feel that your credit report scores are not as good as they should be, the first thing you should do is order a credit report to which you are legally entitled to on an annual basis and review it as soon as you receive it. Any negative findings on your credit report and scores will be accompanied by an explanation so you can be made aware of what you need to do to correct these items that may be negatively affecting your credit.

One of the easiest items to fix on your report is basic information that is inaccurate such as your name or address. Clerical errors with this type of information can cause problems in verifying your identity and thereby hurt your credit rating. You need to submit a letter of dispute to the credit bureau from which you received your report in order to have the information corrected.

The greatest amount of information on your report is your payment history. Payments that are made but are late can create the greatest damage on your credit report and scores. If you have accounts for which you have not made payments in the last 30 to 60 days, then you should pay these off as best you can so as not to take a toll on your credit report and scores. If any charge-offs or accounts on which collection agents have been called also appear on your credit report and scores, then you should try to negotiate with your creditors and debt collectors in order to have them removed from your report. They are under no obligation to do it but you might be able to talk them into helping you.

Another issue that you can fix is your level of debt. This means that any balances on your credit card accounts should be no more than 20% of your credit card limit. Any balances over your credit card limit should be handled first so as to avoid any special fees and then any remaining balances that are over the 30% limit should be paid down so that your credit report and scores can be improved.

Defaulting on student loans is not often mentioned with regard to credit reports and scores but they can have a negative effect on your credit. A positive aspect of defaulting on student loans is that you can bring them out of default by talking with your lender and making timely payments for a period of time until the loan is paid off and considered current. A record of a defaulted student loan may not always be permanent and can be removed if repayments are made in a timely fashion.

Bankruptcy, foreclosures and tax liens cannot be fixed and remain on your credit report and scores for many years. The best you can do is to keep your accounts current and demonstrate that you are someone who is now able to manage your credit.

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