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Credit Repair Services and Information

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  • What you need to know about credit repair
  • Credit repair tips

Credit Repair Services and Information

What You Need to Know about Credit Repair

Are you looking for credit repair? Do you need credit repair before you begin a large financial transaction, such as a home purchase, home loan refinance, or vehicle purchase? If you have bad credit and are looking for credit help, be sure to get armed with knowledge and get a game plan for fixing your bad credit problems.

While you can repair your credit, it is crucial to remember that it is not possible to legally remove accurate and timely negative information from a credit report although you certainly can challenge any inaccuracies on your credit report. Make sure to use Bills.com as a resource to learn more about credit repair and find a company that can assist you, if you need it.

Credit Repair Tips and Advice

There are several steps you can take to help improve your credit rating, but building and maintaining a good credit score requires diligent effort and a long-term commitment to financially sound living.

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account, which is commonly the charge-off or  R9 date  (a credit reporting term). To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7½ years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely.

You could dispute the inaccurate items on your credit report without the assistance of a credit repair firm. However, like most professional services, you pay these firms to do the work for you and to provide professional advice based on their experience in working with other consumers in similar situations. 

Step 1: Obtain a copy of your credit report.
First, obtain a copy of your credit report from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You can request no-cost, no-gimmick copies of your reports by visiting AnnualCreditReport.com.

Once you have received copies of your reports, you should carefully review them to make sure that all listings, especially the listings appearing in the "derogatory" category, belong to you and are being reported accurately. Credit reports are notoriously inaccurate, with consumers frequently finding listings of derogatory accounts that never belonged to them or that were paid off years ago.

Dispute any inaccurate listings with the appropriate credit bureau. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

Clearing up inaccurate derogatory accounts may improve your credit score significantly, depending on the number of inaccurate listings you find on your reports.

Step 2: Pay off items.
Next, you should try to pay off any derogatory items that legitimately belong to you. While paying off these accounts will not remove them from your report, it should improve your credit by reducing the amount of delinquent debt reported to the bureaus and preventing the accounts from continuing to be reported as delinquent.

Once you have dealt with your derogatory accounts, you should begin paying down your other accounts, to reduce your debt to available credit ratio. You can safely carry some debt, but carrying too much debt month to month demonstrates that you are financially strapped, and should not be extended more credit. Ideally, your ratio of debt to available credit should be no more than 33%.

Step 3: Build your credit.
Finally, if you do not already have a long, positive credit history, you should begin to build one. You can start by opening a few small credit card accounts, making charges on them, and paying off all of the balances each month. By doing this, you will show yourself to be a responsible user of credit, and your credit score should improve with each month you continue to show a positive payment history. If you find that you cannot obtain a traditional credit card because of credit problems, a secured credit card, in which you deposit cash in an account as collateral for the credit line, can help build a positive credit history.

How to calculate your credit score
Your credit rating is calculated based on several variables, including your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history. Since your past payment history accounts for approximately 35% of your FICO credit score, establishing a good payment history with your creditors is essential to building and maintaining a good credit rating.

To learn more about credit and strategies to improve your credit score, I encourage you to visit the Bills.com Credit Solutions and Resources page and to review the Bad Credit page for more tips on how credit scores are calculated and how to solve credit problems.

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