This is a guest post by Darin Sewell
When it comes to fixing bad credit most people have no idea what they need to do or where to start the process. Many simply give up and do nothing hoping the problem will go away on its own, it rarely does. Others turn to credit repair companies that charge a lot of money for their services hoping they do some secret step to make a bad credit score jump overnight. But what most people do not realize is that they can easily fix their own credit, though it will not happen overnight and will take some effort and dedication. Let’s take a brief look at what is required to increase your credit score in the article below.
The Very First Step You Must Take
First, you need to get yourself in financial shape so you can make all of your bill payments on time and also save a small amount each month for emergencies because if you cannot do this then you might as well not even start. I know paying your bills sounds like a no brainer but you would be surprised how many people skip payments to pay for other things that pop up. This is where saving comes in, if you have no emergency fund when you get in trouble you are going to charge it to your credit cards. This just adds to your problems and keeps you not only in debt but also in the vicious circle of bad credit.
Where to Find These Savings
I know what you are going to say, “I have no extra money to save”. While this might be true for a small amount of people, the average person wastes a lot of money every month that they could easily save. For example, if you cut back your cell phone package or take basic cable as opposed to the ultimate package that’s money you can save. Cutting expenses like this does make living a little less luxurious but the payoff is worth it!
You Have To Budget Yourself
Once you find the extra money you need to apply to your debt and savings, sit down and budget your bills. Figure out what you will pay extra on each bill every month and stick to it. Many accounts now allow auto pay and you can set this up so the amount is automatically paid every month. This keeps you on track and your debt levels going down. To make the balances go down faster I like to attack the account with the smallest balance first. Once it is paid off take the money you used to pay towards it and apply it to the next largest account. Once you pay of two or three accounts like this your payment amounts snowball and your debt drops quickly.
The Second Half of Credit Repair
Keeping yourself on track financially is however only one part of the credit repair process, you also have to make sure your credit report is free and clear of errors and damaging information. This is the part where it can get a little tricky and where the real work comes in. This is also the part many people choose to pay to have a company do for them. This is fine, but just make sure you use a nationally known credit repair company with a good BBB rating as the credit repair industry is overrun with fraud and fly by night companies.
Where to Start the Credit Report Clean Up Process
The first thing you need to do is buy a copy of your credit report. Do not take a free copy as these do not show your scores. Instead purchase a copy of your credit report from each of the three bureaus Experian, Equifax and Trans Union. This lets you see what each of them is reporting about you, and trust me they all report different stuff!
Go through the negative accounts and look at what is being reported. Look at the balances, the credit limits, the date of late payments and anything else that you can find. Chances are something will be reported incorrectly and when it does you can dispute them with the credit bureaus with the goal of getting them removed. Also keep a watchful eye out for any items that are not yours or blatantly false information.
The credit dispute process is a very easy process to carry out and I will go over it lightly below. In a nutshell all you need to do is write a hand written letter to the credit bureaus explaining why the account is incorrect and ask them to remove the information. They will generally launch an investigation into the matter and if the lender who is reporting this information cannot verify it with documentation then the bureaus will remove it for you! The process takes about 45 days to complete for each item and it is wise to only dispute 1 or 2 items at a time or it may make you look suspicious to the credit bureaus and they will stop accepting your disputes.
What Credit Repair Really Boils Down To
Paying your debt down and paying your bills on time while removing negative items on your credit report is the core tactics to credit repair and they take time. There are no magic steps to give you a 200 point jump overnight or give you perfect credit when you have a 500 score. There are courses and software programs out there that can assist you in your efforts but none of them will give you that upper hand or eliminate the need to do the basic groundwork I have explained above.
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