A Glimpse into the Basic Steps of Credit Repair

Credit repair takes a little work, but it is not all that hard to do. A lot people decide to take on the challenge and many are quite successful at it. Having a clear credit record and a good credit score is possible, and it is vitally important to have a good score. Without one it will be very difficult to be able to get loans of any type. Home mortgages, as well as car loans, are easy to get if a good credit score is available. Know how to repair credit, and the easy steps that are involved in doing it.

Credit repair is possible. The first step in getting debt paid off is to get a copy of all credit reports to Experian, Equifax and Trans Union. The big three companies are where all credit information is reported for lenders to look at when anyone wants a loan. Scores are usually based on a mathematical formula, and lenders take these scores, and look at them to see the credit worthiness of an applicant for a loan. Depending on the lending company’s financial guidelines and rules they can use only one score, or average scores of any of the scores. It is necessary to see what the scores are to see where to begin repairing credit.

Concentrate first on removing charge-offs from the list of the big three credit reporting agencies. A charge is where the company that has given a loan has stopped trying to collect the debt, and will absorb it as a debt, usually on business taxes at the end of the year. The reasons for each company’s decision is either the debt is so small it will cost the company more to collect, or to much time has elapsed for them to collect a debt. A credit history will not be able to be cleaned up if these charges are not removed. Reinstatement and settlement of the account are the two ways to get rid of these debts.

Each creditor for a charge-off will need to be contact by phone, and through the mail with a detailed explanation of why the bill has not been paid on time, or at all. An agreed upon payment plan will need to be arranged, and make sure that all agreements are put into writing. Sometimes if a series of payments are made after the account has been reinstated, then some companies will report to the credit reporting agencies that the debt is being paid on, so it is current and up to date. Be prepared though that some will not do it until the debt is paid in full. If this is not possible then ask the company if a settlement of account is possible. A settlement will be usually on 50% of what is owed, and the rest is taken by the company as a loss. Again make sure that this is in writing, and that the account will be closed once the debt is totally paid off.

The next step in clearing up bad credit is to look at all of the late payments on bills that have occurred. Usually, only a phone will clear up it up, but if the bills have been very late, or have been consistently late for a long period of time, a letter and a phone call should be made. Letting them know that the bills are seriously trying to be paid, will help with delaying in legal actions that the company may be considering against the bill due. Some companies will report the credit bureaus that payments are being made after a specified period of time; most are 60-90 days. Do not miss payments are they will likely not work with the bill again.

If a court order has been made for the bill to be repaid, then all of it must be paid in full for it to be removed from the credit record at the big three. It is imperative to contact the one that gave the loan and pay it off. Make sure that the debt will be removed from the credit reporting agencies once it is paid, and get it in writing too. In the end it will be an emotional relief to get all debt settled, and the credit scores will improve drastically.

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