Free Credit Repair in 5 Easy Steps

There are 5 steps to do-it-yourself credit repair.

Repairing and correcting your credit record is vital for your economic survival and reputation in today's environment. Remember, it won't happen overnight, but if you decide right now to improve your credit-worthiness, it WILL pay off!

1. Order your Credit Reports

2. Examine your Credit Reports carefully

3. Dispute and Document

4. Solve and Dissolve debt

5. Rebuild stability to your credit file

The first step in credit repair is to know what is being reported about you on the three major credit bureaus. There's a very good chance at least part of the information is wrong or outdated.

The three credit bureaus may very well have different information about your accounts. Time and money is wasted if you only look at one report from only one credit bureau. You should order a separate credit report from each bureau before beginning the credit repair process.

The FACT Act, which stands for Fair and Accurate Credit Transactions, was signed by President Bush in late 2003. This act made significant changes and additions to the Fair Credit Reporting Act.

Some of the main benefits of the FACT Act are:

The FACT Act entitles consumers to obtain one free copy of their credit report every twelve months; it increases the standard for the accuracy of information furnished to credit reporting agencies; it creates a right to a credit score from a credit reporting agency for a reasonable fee; the FACT Act also requires a lender or broker who is considering a home loan application to provide a credit score without a fee; this act includes the addition of certain rights for identity theft victims and measures intended to prevent identity theft, including a duty on creditors to take certain steps before granting credit when a fraud alert is contained in a credit file or accompanies a credit score.

The second step in the process of credit repair is to examine each of your credit reports very, very carefully. Almost every consumer has at least one error on at least one credit report from the major credit bureaus.

Credit bureaus compose your report from information provided by your creditors; they don't verify the information as it is given to them. Like it or not--the accuracy of your credit file is up to you and the attention you give to credit repair. Get ready to clean and polish.

Carefully check every detail from outdated or incomplete information to inaccurate account histories. Be meticulous and make a thorough list of items you need to dispute and why.

Next, as a third step, dispute and document anything you disagree with that appears on your credit report. You can either write a letter to the credit report or use the dispute form provided with your report.

Clearly identify each mistake and say why it is wrong. Keep copies of every form, letter, and documentation sent to the credit bureaus along with the dates.

Credit bureaus must investigate any relevant dispute within 30 days of receiving your request. Any trade line that is not verified as accurate by the creditor who reported it is deleted.

The fourth step in credit repair is to solve and dissolve your debt burdens. Devise a spending plan that reduces your debt and sets you up to pay on time, every time a bill is due.

Be proactive if you are having trouble making timely payments. Call creditors and try to negotiate to keep your accounts current and from being reported as delinquent or "bad debt."

You can request reduced monthly payments or a change of the monthly due date to balance out your monthly bills. Also, deal with any collection accounts that appear on your credit report. Unpaid collections are worse than paid collections and severely hurt your credit score.

Try to negotiate a pay-off settlement that reduced the balance and demand that all derogatory marks be removed from your credit report or at least reported as paid in full.

Make sure you get any agreements in writing before sending a collection agency your payment.

Watch your debt-to-credit limit ratio. Many consumers are not aware that credit-scoring algorithms ding them for having too much debt relative to the line of available credit.

Credit repair experts say you should never carry a debt larger than 25 percent to 30 percent of your credit limit. Don't open too many new lines of credit.

Limit the number of credit cards you open because if you have too many lines of credit, it can count against you. Every time you apply for new credit, the creditor pulls a copy of your credit report and score, which can lower your credit score. And remember that the longer you've had the same lines of credit open, the better your score will be.

Often, bill collectors try to get you to give them your checking account information in order to accept a "check by phone" payment from you. DO NOT GIVE COLLECTORS YOUR BANK INFORMATION! These sneaky people will turn around and get a court-permitted freeze or debit on your checking account without your permission.

Always pay long overdue bills with money orders. Also, don't let them pressure you into wasting your money on overnight or express postage to get a payment to them. Regular first-class mail will do. These people don't always play fair.

The final step in credit repair is to rebuild a solid credit file. Although your credit report looks back years, much greater emphasis is placed on more recent information.

A year of improved credit activity can make a significant difference. Paying on time helps build a healthy payment history. And, as the largest factor in determining your credit score (at 35 percent), it's the best way to rebuild damaged credit. Even if you've had credit problems in the past, depending on how many creditors were involved and how far past due your accounts were, a good 12-month payment history can usually produce noticeable results.

Expect information about past-due payments to stay on your report for up to seven years. Your score can still improve during that time as long as you make steady, on-time payments. Seven years after the date of last activity the mark may drop off, but may not disappear completely because it can still be sent to collections.

The avenues of collecting the debt are not cut off, and the calendar resets on the date of activity when reassigned.

Secured credit cards offer people with no credit and those repairing their credit this opportunity. Be careful not to accept secured or starter credit cards with exorbitant fees.

Some credit card companies take advantage of your situation and you may find yourself with a credit card with a $300.00 credit limit and $250.00 in fees on the first bill. It happens, so be careful. National City Bank offers the best secured credit card we know of, although the applications are not always available online-they are available at the branch banking offices- but shop around and you may find other good deals. US Bank also offers an excellent secured credit card great for rebuilding and establishing credit.

It is extremely important to keep utilization of your available credit at about twenty percent. This ratio really affects your FICO score. In other words, never have credit card balances of more than about twenty percent of your total credit line.

By following these steps in your credit repair journey, you are on your way to a much better and secure financial future.

Save Your Credit Rating�s main focus is on repairing your credit report. We have helped thousands of Americans repair their credit reports by removing inaccurate, misleading, or unverifiable marks (in other words, "questionable" negative credit). From charge-offs to tax liens, we have challenged virtually every credit problem imaginable. Click here to find out more!

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