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Credit Repair: Doing It Yourself - Part 1

By Edited Nov 8, 2015 1 2

A Step By Step Guide To Credit Repair

Before you go any further you should be aware that repairing your credit can be a massive undertaking. If you only have a few negative marks on your credit and you have an incredible streak of luck then there is a chance that you can have a perfect credit score within a week. Unfortunately, the credit bureaus are notorious for sticking to their guns. In other words, it will be your job to prove to them why they should even consider changing your credit reports.

Credit repair services are convenient, you will probably get decent results but you have to remember that getting a higher credit score is only part of the equation. If you are patient and are prepared to learn about how credit bureau agencies review disputes, there is no reason that you won't be able to substantially raise your credit scores without needing to spend money. The only reason that you should really consider working with a credit repair company is if you are getting ready to close on a house and you need to raise your credit scores by a few points in order to get your home loan application approved.

If you do decide to work with a credit repair company work with non-profit agencies such as housing assistance programs so that you can be sure to be aligned with a reputable company. Be careful about who you choose to do business with as some credit repair companies use software to temporarily raise your credit score through artificial means. Ask plenty of questions before you sign an agreement and use a credit card to pay so that you have recourse options in case the credit repair service does not follow through on its promises.

Ethical credit repair has nothing to do with trying to avoid paying bills that you lawfully owe. However, as accounts change hands you have no way of telling who legally owns your debt unless you go through the validation process. If you get a bill in the mail saying that you owe an arbitrary amount of money there are several steps that you should to to establish that you do, in fact, owe the debt in question.

Past due accounts can sometimes grow larger over time, but the federal government has put rules in place to prevent creditors from bilking their customers. This is why you should become familiar with the Fair Debt Collection Practices Act (FDCPA). Educate yourself on the FDCPA and you will be effectively arming yourself with an arsenal of weapons that can help you to erase negative trade lines and block further collection efforts the debts are validated.

After you know how the Fair Debt Collection Practices Act use this information from being bullied into making agreements that are not adventitious to your financial well being. You should also familiarize yourself with the acronyms, phrases and credit terminology used by collection agencies, credit reporting bureaus and other related industries.

You have the option of viewing your credit reports from the three major reporting agencies online, but for this task you should go ahead and order hard copies. Contact Experian, TransUnion and Exquifax and ask to have paper copies of your credit reports sent to your home address. While you wait for them to arrive you should begin to gather up all of your credit card statements, bank records, receipts and bills.

After you have had a chance to go over your credit reports to look for inconsistencies you can begin to look up the contact information for the accounts in question and start sending letters to the billing and archives department. You can also make use of what are known as goodwill letters. If you missed the payment due date with a company currently services one of you accounts, sending a goodwill letter may persuade them to delete the derogatory remarks. Note that this is normally effective only when you have a satisfactory payment history overall. Goodwill letters are also effective if you have accumulated a number of substantial medical bills as a result of becoming permanently disabled. Medical debt is a little different than credit card, loan, mortgage or student loan debt, but you should always exhaust all of your resources before giving up.

If you have any accounts that have been closed or charged off you will want to locate the names and addresses of the original creditors. Most of the time, closed accounts will be sold to debt collection companies, but there is still a chance that you can offer a settlement amount, and even the remote possibility that your former creditors will be willing to reopen your accounts. If your accounts are delinquent then you want want to call the account holders and setup a payment plan that you will realistically be able to follow through on. You do not want to send a validation letter to an original creditor when you are sure that you opened the account in question. This action could possibly lead to legal action if you are aggressive or are not truthful in your correspondence.

Your plan of action for dealing with collection agencies will need to be flexible. If you get prepared for a long, hard fight you may be surprised when you see how easily some of them will fold when challenged. On the other hand, there are some collection agencies that profit by using intimidation, harassment and other illegal tactics. This is why you should stay off of the phone with collection agents at all costs unless you are recording the call and sitting in the room with an attorney. Even if you are fortunate enough to speak to a kind, caring and ethical collection agent you have no idea if the company itself is a legitimate operation.

After you have gotten in touch with the original creditors you will know which collection agencies are legally authorized to collect and which ones are not. Send off debt validation letters to all of the unauthorized debt collectors, certified mail and return receipt requested. Give them 30 days from the day that they receive your debt validation letter to submit the required proof to you in writing.

If you get a response that contains anything less than a copy of your contract with the original creditor you can be absolutely certain that the debt collection agency doesn't have a leg to stand on. Hand write a formal dispute letter to the three major credit reporting agencies and include copies of the correspondences be the debt collector and yourself. By law, the debt collection agency must cease all collection efforts as well as suspend credit reporting until they can provide proof that proves otherwise.

These are only the first preliminary steps in credit repair, but the satisfaction you will feel when you see your credit scores improve will make the work well worth it. Most debt collectors will completely delete a trade line once you have proven that they are not authorized to collect, but remember that bad debt is a multi-billion dollar business. When you come up against debt collection companies that refuse to budge even after you have followed the rules outlined in the FDCPA properly you will need to use other avenues. In the second part of this article practical information on how to approach the credit reporting agencies, the Better Business Bureau, the Federal Trade Commission and attorney generals in applicable states so that justice will be served.

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Comments

Feb 26, 2011 2:56pm
Sookie
Taking the time to order or get your credit report is a great first step. Great article!
Feb 26, 2011 3:27pm
Tara_Peale
Thanks, I really appreciate it. I'm going to have to make some edits as I see that I missed a few words, but I guess this will happen from time to time. Working on part two now!
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