Repair Bad Credit

Recognize the Problem

The first thing to do when you find yourself in a hole is, as the clichÃ?© goes, stop digging. When the credit reports are coming out with scores closer to your age than the ideal 830 and you’re getting rejected by rent-to-own companies, you know there’s a problem.

Don’t allow yourself to get stressed out to the point that your anxiety freezes you and you do nothing. Bad credit can be repaired and you can get on with your life. Money problems are not impossible to overcome. Before you do anything else, make sure that you have a plan including a workable budget and bill-pay system that will insure that you don’t end up in this place again.

Another fact to remember is that you are not alone. While the economy is improving, the recession of recent years left an overwhelming majority of Americans in some serious debt. The average consumer debt in the U.S. (not including a mortgage) is a whopping $40,000. Having bad credit does not make you a bad person.

How Does Bad Credit Happen?

Credit scores are calculated using many variables, including the amount of debt you currently have, past credit, negative credit, length of time you’ve held credit cards, the number of credit cards you have, etc. It’s actually an extremely complicated process, so the main thing we’ll focus on today is bad credit. How does it happen?

Credit scores are lowered for two main reasons: lack of credit and negative credit. Lack of credit simply means that you’re inexperienced with credit. Negative credit, on the other hand, usually shows that you have been irresponsible with money in the past. For example, if you miss a car payment and are late by 30 days, the establishment that holds your loan usually sends a notice out to one of the 3 credit reporting agencies and they put negative credit on your account.

Late bill payments (including utilities bills), court decisions against you, etc. hurt your credit score. Luckily for you, there are laws put in place to protect consumers that will work in your favor to erase these negative scores from your credit report. You just have to know how they work and how to make them work for you.

Hiring a Credit Repair Service

Many people decide to hire a credit repair service to do their dirty work for them. I do not suggest this. Not only can you get the job done for free, but you can do a much better job and be much more efficient than any service.

If you do want to hire a service, however, here is the basic low-down on what to do: find a service with some cement promises. “We will improve your credit” is very subjective. Some services will claim that after your credit score has raised 2 points (basically nothing), they have earned their pay and are done with you. Choose someone who promises to continue to work until all of your negative credit is removed.

Some links to popular credit repairing services can be found at the end of this article. I do not, however, endorse any of them as I have never used any in the past. They should be used only as a guide to direct you in the right direction.

Doing the Job Yourself

In my opinion, this is the way to go. This method is free, completely legal, and very effective. There are a couple of things to keep in mind throughout this process: 1) persistence is key, and 2) persistence is key.

First you’ll need a copy of your credit reports (one from each of the three agencies, listed at the bottom of this article). Do NOT pay for this! You, as a consumer, have a right to one free credit report per year. (Visit for more details.) Also, if you are denied credit for any reason, the establishment denying you credit must give you a copy of your credit report (though they do not have to specify what exactly made them deny you).

Second, you’ll need to learn how to read the credit report. While even financial gurus are confused as to how the credit score is calculated, the credit report makes it very obvious what negative credit you have.

Here is the most important concept in this process: because credit affects you so strongly, you have every right as a consumer to dispute this negative credit, even if it is accurate, and you may dispute it as often as you feel necessary. This is very simple to do. Simply write a letter (these days some of the credit reporting agencies allow emails, but I still prefer “snail mail” when repairing credit) basically stating “I would like to dispute this negative credit (be specific).” (Use your own words, but get that message across.)

The credit reporting agency must then, by law, send out a letter to whoever gave them the information about your negative credit. Here is the second most important concept in this process: because mistakes can be made and fraudulent claims happen, the establishment that claimed you were irresponsible MUST reply to the credit reporting agency within 30 days saying that yes, you did in fact commit whatever infringement they originally claimed. And they have to offer supporting evidence.

This is where persistence pays off. If the establishment does reply, the credit reporting agency must send you another free credit report. Try again. And again. And again, if necessary until that bad credit is removed, and it will eventually be removed. The establishment may get sick of replying and just figure it’s not worth it or may lose your paperwork. The credit reporting agency may get sick of replying and just delete your negative credit automatically.

When you do get the negative credit removed, you are given another free copy of your credit report and you may move on to the next bit of negative credit. Yes, it really is that simple.

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