How To Repair Bad Credit

How To Repair Bad Credit

Can bad credit be repaired? Most consumers believe that once you have bad credit, then you will never again have good credit. Bad credit is extremely difficult to repair, however, it can be done. What you need to keep in mind, is that bad credit only lasts as long as the delinquencies on your credit report last. Once the negative items on your credit report are removed, then you will once again have good credit.

Okay, so what is the time limit for negative items to stay on a credit report? Bankruptcies stay on the credit report for about ten years and negative items stay on for about seven years. Why do I say "about" seven and ten years for negative items? Typically, the negative items should be removed after seven and ten years, however, it often takes a bit longer for these items to be removed by the credit bureaus. In general, the seven and ten year periods are calculated from the date that the event took place.

One way to repair bad credit, is to negotiate a settlement of delinquent debt. Generally, you can negotiate with the debt collection agency or bank that owns your delinquent debt. A rule of thumb, is to try and pay about thirty to fifty cents on the dollar. You can usually get an agreement, in which the debt owner, will agree to place a "settled in full" statement on your credit report, once you have paid the agreed upon amount. Never pay the negotiated debt settlement amount, until you have an agreement in writing. This is because once you have paid this amount, the debt owner, has no incentive to place the "settled in full" statement on your report. If you pay the debt, and the debt owner fails to place the "settled in full" statement on your report, without an agreement in writing, you will have no proof that the debt was settled in full.

If you don't have any money to repay any portion of the delinquent debt, then another way to re-establish good credit, is to start taking out small loans at a bank or loaning institution. This method also works by establishing timely payments through secured credit cards. It seems quite bizarre, but you can actually drown out bad items with good items. What this simply means, is that if you have fifty loans that are in good standing and ten loans in bad standing, the loans in bad standing, will be eclipsed by the loans in good standing. Keep in mind, that you will have to take out very small loans, and pay these loans back on time, in full, every time. Paying off about twenty to thirty small loans on time, will make a significant difference in calculating your credit score. Many individuals credit scores can raise a few hundred points, in a relatively short period of time, with this method.

What if you have bad credit because of fraudulent activity? First, let's specifically define fraudulent activity. The majority of the consumers define fraudulent activity, as individuals who take out credit cards or loans, based upon someone else's identifying information. That is only partially true. Fraudulent activity, can also be a credit card company illegal raising an interest rate in violation of contract terms, a loan being called in before it is due, a bank demanding an illegally accelerated payment of a loan or credit card, or any other violation of law by a financial institution regarding the repayment of a debt. Most consumers fail to recognize when financial institutions commit fraud. The simple solution for fixing bad credit because of fraudulent activity, is to dispute the activity on your credit report. In real estate, the motto is: location, location, location. When it comes to fraudulent credit activity, the motto is: dispute, dispute, dispute. Consumers have the right to dispute any and all fraudulent activity on the report, whether by individuals or financial institutions, by contacting the three credit bureaus and disputing the debt, in writing.

Bad credit, can and should be, repaired. With a little effort and time, bad credit items can be either erased, settled, or eclipsed by good credit.

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Bryan Pringle, Ph.D., has written many articles on the credit industry, and is the webmaster of websites offering news and information regarding credit cards. For more information, please visit: http://www.apply-forcreditcards-online.com

How To Erase Fraudulent Activity On Your Credit Report

Everyone has heard the horror stories. The stories about individuals whose credit score is ruined from errors and fraudulent activity that is posted on their credit report. Stolen identities, stolen credit card numbers, and stolen Social Security Numbers, can all be used to fraudulently apply for credit on your credit history. There are a few simple rules to keep in mind if ever you have fraudulent activity reported on your report.

Always remember to dispute the fraudulent activity on your credit report as soon as you find out about it. Waiting too long, can erode your rights to dispute the fraudulent activity on your report. Make sure to write to all three credit bureaus, when disputing fraudulent activities. Only disputing fraudulent activity with one credit bureau, will not erase the activity reported on the other two bureaus.

Make sure to ask for proper documentation from the financial institutions that are reporting the fraudulent activity. Many times individuals will dispute the activity, but forget to request documentation from the financial institutions reporting the activity. If you don't ask for the proper documentation, then you won't receive it. Usually, the fraudulent activity is some sort of mistake that can be cleared up upon inspection of the credit application and identifying information, given to the financial institution by the credit applicant. In many cases, the financial institutions may have wrongly reported someone else's credit activity on your report, simply by erroneously giving the wrong address, wrong name, or wrong Social Security Number to the credit bureaus.

Keep in mind, that if the financial institution doesn't provide the proper documentation to prove the debt is actually yours within thirty days, then by Federal law, the credit bureaus have to remove the disputed charges from your report. This is defined in the Fair Credit Reporting Act. Don't be under the impression however, that after thirty days, the disputed charge will be removed. Although the credit bureaus are required by law, to remove the disputed charges from your report if the financial institution doesn't provide the appropriate documentation automatically, usually you have to write them again, after the thirty day period expires, to inform them of the failure by the creditor to provide the proper documentation. Persistence is the key.

It usually takes on average, about four to six months, to clear up fraudulent activity on one's credit report. Unfortunately, it is a very slow process. Also, be aware that the individuals who work at the credit bureaus, may not necessarily be legally savvy. It is always a good idea, to provide the credit bureaus with copies of the relevant legal statutes, under which you are making the dispute of charges.

Don't get discouraged if at first the disputed charges are not removed in a timely manner. Remember that persistence is the key. Sooner or later, the financial institution will usually give in, and remove the disputed charges. They are not in business to fight with consumers over disputed charges on their credit report. They are in business to make money from interest charged on the borrower's debt.

Sometimes, the credit bureaus and the financial institution will refuse to remove the disputed charges. If this happens, then you have the right to place a comment along with disputed charges. You can say something like "Credit company refuses to remove fraudulent charges", or "Credit card was issued to someone else fraudulently, and charges are not mine." You may also want to consult an attorney, because you may have the right to sue the financial institution and the credit bureaus, to force them to remove the fraudulent activity on your report.

Always remember, that just because a fraudulent charge is shown on your credit report today, doesn't mean that it has to be there tomorrow.

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Bryan Pringle, Ph.D., has written many articles on the credit industry, and is the webmaster of websites offering news and information regarding credit cards. For more information, please visit: http://www.apply-forcreditcards-online.com