Bad Credit Repair Advice

Poor credit doesn’t have to haunt you forever! There are plenty of things you can do yourself at no cost at all to improve your Fico score. There is nothing a ‘credit clinic’ can do for you that you can’t do for yourself!

Step 1 – Pull Your Free Annual Credit Reports
Your credit reports at the 3 major credit bureaus (Equifax, Experian & TransUnion) contain all the information about your current credit situation. Hence, they hold the answers to your credit problems.

You are entitled to free credit report every 12 months, one from each bureau, that you can obtain from the government-regulated Annual Credit Report Service (See ../free-annual-credit-report/ for more details).

Order a combined report from all three bureaus (called 3-in-1 Credit Report because it’s much easier to track errors this way. You’ll also receive an explanation about the items on your reports that negatively affect your credit the most. This should give you an idea of what needs fixing.

Step 2 – Check Your Reports
You need to check your credit reports thoroughly for errors that may be negatively affecting them. In particular, pay attention to the following:

• Do you have any late payments, defaults, bankruptcies, liens or judgments on your reports?
• Are they reported correctly? Are they all yours? Are all dates and sums correct? Are some of them INCORRECTLY reported as late? Do some of them older than 7 years?
• What’s your overall credit utilization? Are all the sums on all accounts reported correctly?
• Are all reported inquiries the legitimate (i.e. originated by your search for credit)?

Step 3 – Analyze Your Reports and Target the Major Problems
Even if the truth is ugly, the first step in improving credit is knowing exactly what you’re up against. There may be multiple negative items on your credit report, but each affects your credit differently. While some may have a lesser effect, others should get your full attention.

Start with the explanation sheet that accompanied your credit reports. This document almost always clearly marks the culprit for your bad credit. Your Fico score may be low because of:

• Negative items such as bankruptcy, foreclosures, repossessions, charge offs, court judgments, loan defaults, collections, past due and late payments or too many credit inquiries.
• Credit utilization above 35%
• Too many open credit accounts accounts.

Step 4 – Fix Your Problems
Deal with your problems in order of priority – how much they weight down on your score. For example, there’s no point disputing an unauthorized credit inquiry if your credit cards are all maxed out…

Here’s a list of potential negative items that may be pinning down your score, listed according to severity. Part 2 of Bad Credit Repair Advice will show you how to deal with each one of them.

• Bankruptcy
• Foreclosure
• Repossession
• Loan Default
• Charge Off
• High Credit Utilization (above 80%)
• Court Judgment
• Collection
• Past Due Payment
• Late Payment
• High Credit Utilization (above 35%)
• Credit Rejection
• Credit Inquiry

Continue to Bad Credit Repair Advice Part 2 for more information about collection accounts, pay-for-delete (PFD) agreements, good-will letters, ‘fast credit repair’ and more!