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Tips for Repairing Your Credit


									by: Rebecca Game

Repairing credit scores cannot be deemed an easy task, but also cannot be considered an
impossible task, either. Many individuals have less than ideal credit scores due to a number of
factors. It can be due to a job loss, where bills fell behind due to reduced household income.
Repairing credit scores can be necessary in situations where a medical emergency occurred, and
medical bills have piled up beyond reason, or the individual that was injured was contributing to
the household income is now unable to work.

Credit scores can be reduced due to a debt ratio that is much higher than the income level, and
can also occur if all payments are not made on time or are not made at all. A bad divorce can also
contribute to an individual's financial well being, and can lead to poor credit scores when bills
are in the middle of an argument and payments are not made on time or are not made at all.

Regardless of the reason for poor credit occurring, be assured that you are not alone. Many
individuals need to repair credit scores, and while it can create a dilemma when a loan is needed,
even loans are not impossible in most situations, though interest rates may be higher. If possible,
try to repair credit scores before applying for a loan, if time allows. Take a few important steps to
repair credit scores.

1. Request copies of your credit reports to assist in repairing credit scores.

Lenders rely on three reporting credit bureaus: Experian, Equifax, and Transunion. These three
bureaus are where all lenders turn prior to offering a loan to any business or individual. To
understand what they are seeing, obtain copies of your reports offered by each of these credit
bureaus. You may obtain a free copy of your credit report from each bureaus once per year, or
more if you have been denied a loan or have been denied some type of credit due to your scores.
In addition to requesting the reports, be sure to also request your credit scores be revealed.

The reports and scores can be requested online at,, and, or can be obtained by calling their toll free numbers.

Experian: 888-397-3742
Equifax: 800-685-1111
Transunion: 800-916-8800

2. Once you've obtained your credit reports, review and understand them in order to repair credit

In order to repair credit scores, it's crucial to understand what it is that needs to be repaired.
When creating a credit report, the three credit bureaus study the credit history of an individual
and calculate a credit score, which lenders use in considering whether or not to approve a loan.
This credit score is known as the FICO score, and is calculated using software created by the Fair
Isaac Company. Credit scores range from 300, for no credit, to 850, for perfect credit. A credit
score below 619 is considered poor credit and the borrower is considered a high risk to a lender.
3. To repair credit scores, read through each item listed.

If there are items on your credit report that are not yours, such as a loan that was given to your
spouse after a divorce, report those errors to each of the credit bureaus who lists those errors.
Likewise, there may be occasions where identity theft or other errors on the part of the reporting
bureaus have occurred. Read through each item carefully, and contact each credit bureau that has
incorrect information regarding your credit history. Don't be afraid to dispute anything at all that
may be of question.

Contact each bureau promptly with these disputes. There is normally a 30-day waiting period
after filing a dispute, where the credit reporting bureaus will contact each of the creditors in
which you're disputing, offering the creditors the opportunity to respond or remove the listing
from your credit report. If not response is received, the credit bureaus are required by law to
remove those items from your credit reports, which will be one step in assisting you on repairing
credit scores.

4. Consider a consolidation loan, reorganize your financial structure, and maintain control of
your spending in order to repair credit scores.

Obtaining a consolidation loan, such as refinancing a home or obtaining a home equity loan, is
an excellent step in the right direction when it comes to repairing credit scores. By consolidating
all debt into one lower monthly payment, even if the interest rate is higher, it usually will have
more positive impact than negative impact because it can greatly assist in repairing credit scores.
A consolidation loan will pay off as much existing debt as possible, and credit scores will
increase over time, provided new debt is not incurred due to the loan.

Not everyone gets a fresh start, so it's crucial to keep that in mind after signing for the loan. If
you're tempted to spend more once the loan is in place, consider the impacts involved. Your
attempt to repair credit scores could possibly be lost with careless spending. Spending more
money once obtaining a consolidation loan will only reduce credit scores more than what they
were previously. Stay away from payday loans, and destroy all but one credit card, which should
be used only for emergencies, such as unexpected automobile repairs. If the card is needed for
such an emergency, pay it off in full before using it again. Don't splurge or make any purchases
in haste, or your efforts to repair credit scores will be lost.

5. Make payments on time to repair credit scores, either with or without a consolidation loan.

Especially if you've decided to obtain a consolidation loan, make all payments on as scheduled.
To fully repair credit scores, this is one of the most important steps to take. Showing that you can
pay your bills is one of the highest impacting actions that you can make. It illustrates you as a
financially responsible individual, and can increase your credit scores as much as 100 points or
more in just one year. By repairing credit scores simply with making payments on time, within
that one year, it's possible to bring yourself into a better credit rating bracket, with more financial
opportunity available in the future, including lower interest rates, which lead to lower monthly
If you opt not to obtain a consolidation loan, start making payment arrangements with your
creditors to aid in repairing credit scores. Start by making arrangements with the creditors in
which payments are the latest. Most creditors will gladly work with you if you make payment
arrangements and stick to the payment plan. By not communicating with your creditors, they
assume the worst of you. If you make them aware of your financial difficulties, most will be
flexible enough to work with you so that your debts can be paid.

If your creditors involved credit card companies, ask them to re-age your accounts. By re-aging
credit card invoices, the credit card company will remove all late payments and added interest,
significantly reduce the interest rate you're paying on the account, and bring your payments
current. They'll also report the payment arrangement with the credit bureaus, and this step alone
will help repair credit scores. It may mean that the accounts will be closed, but having them open
in the first place are the reasons for many financial problems due to unnecessary purchases.

This article was posted on January 18, 2006

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