Resources and information about how to fix bad credit and rebuild your credit score.
Basic Credit Rebuilding Strategy
The basic strategy to rebuild credit is as follows:
1. Get your credit report.
This is the first step. To obtain free copies of your credit report, visit
Annualcreditreport.com. By law you are entitled to one free copy every 12
months. Please note: when you get a free report, you are not going to see your
credit score, which is a crucial tool for rebuilding credit. To purchase your
credit scores, we recommend
2. Analyze your credit report.
You can analyze your credit as outlined in the instructions with the credit
report and score. You can use the free credit report analyzer which comes
with your credit score to figure out which items on your report are damaging. We
suggest printing out your report then highlight everything you see as a negative
listing along with what the computer analysis pointed out.
3. Rank questionable/negative items
Step 2 covered how to identify items, both positive and negative on your credit
report. Now you have this list, you should rank each item according to the
amount of damage they are doing to your overall credit picture. Rank the most
damaging information first, followed by the next most damaging information,
followed by those items which are neutral. Do this for each credit report. You
must be aware, though, they may not all have the exact same information on them.
The items here are listed in order of descending importance with the first item
being the "most damaging" to your credit.
Past due payments
4. Requesting Corrections and Disputing Your Credit
What should you challenge? Answer: everything that is
damaging, and you should always shoot for a complete deletion. In your initial
challenge, meaning the first letter that you send to the credit bureaus, don't
dispute the specific information within a collection listing, a charge-off, a
court record, a repossession, a foreclosure, or a settled account. Save
disputing the specific information within the listing for the NEXT ROUND OF
DISPUTES. The first time you contact the credit bureaus your reason for your
dispute on a negative listing whenever possible should be "not mine".
You will have the toughest time getting bankruptcies, judgments, child support
and foreclosures off of your credit report as these things are very easy for the
credit bureaus to verify electronically through e-Oscar. In the instance of a
bankruptcy, if that applies to you, there will most likely be a few trade lines
saying "included in Bankruptcy". If you want to challenge your bankruptcy, you
will first need to clear off all credit lines mentioning a bankruptcy before
challenging the bankruptcy itself.
5. Make sure you send your dispute letters by registered or certified mail.
This is important, as you must be able to tell when letters were sent and
received. It gives you some leverage with the credit reporting agencies if they
don't respond in the time frame required by law. DON'T USE THE ONLINE DISPUTING
SERVICE PROVIDED BY THE CREDIT BUREAUS. You need to be documenting everything,
and you want to make sure that you have a complete record of your disputes.
6. Document Every Step As You Rebuild Credit
As soon as you have ordered your credit reports and photocopied your order
letters and checks, you must create a precise organizational system to track
your correspondences with the credit bureaus and your creditors. Why is this
necessary? Unfortunately, credit items you have worked so hard to remove
sometimes mysteriously reappear. If this happens, it is usually easy to have the
items deleted permanently if you show your complete records on the first
removal. Why take a chance? As you proceed through these steps, keep copies and
records of all correspondence you send and receive. Copies of all correspondence
are a must, as well as notes on all telephone conversations! Also, if you should
encounter any special difficulty and would like help in repairing your credit,
you will need these records to proceed.
Every time you have a telephone conversation with a creditor, you must document
the conversation by recording the name of the person to whom you spoke, his or
her position, the date and time of the conversation, what was said in the
conversation, and what was agreed upon.
7. Wait for the credit bureau to finishing investigating
Once the credit reporting agency has received your dispute letter, they are
obligated to investigate. This obligation is not contingent upon you having been
denied credit. According to the Fair Credit Reporting Act, the credit bureaus
must take the following steps:
The credit reporting agencies must resolve consumers' disputes within 30 days
limit, unless you have used the services of annualcreditreport.com, then the
bureaus can take up to 45 days.
In response to consumers' complaints that documentation in
support of their disputes was disregarded, the credit bureaus have to consider
and transmit to the furnisher all relevant evidence submitted by the consumer
the first time.
Consumers will receive written notice of the results of the
investigation within five days of its completion, including a copy of the
amended credit file if it changed based on the dispute.
Once information is deleted from a credit file, the credit
bureaus can not reinsert it unless the entity supplying the information
certifies that the item is complete and accurate and the credit bureau notifies
the consumer within five days.
The Federal Trade Commission has stated that inaccurate credit
reports are the number-one source of consumer complaints, and that it is quite
common for problems to take six or more months to be resolved. All of the
big-three agencies are working on making sure that all disputes are handled
within 30 days.
If the new investigation reveals an error, you may ask that a corrected version
of the report be sent to anyone who received your report within the past six
months. Job applicants can have corrected reports sent to anyone who received a
report for employment purposes during the past two years. However, this is
unlikely to repair any damage done when your credit report was first pulled, so
don’t waste your time or energy on this approach.
8. Evaluate the results of your efforts to rebuild credit.
When you get your "repaired" credit report back from the credit bureaus, they
will summarize what changed on your credit report due to your challenges. You
can compare this list to your own notes or just to the previous credit report.
9. Repeat your credit bureau dispute:
It's a good idea to keep disputing negative listings with the credit bureaus. If
you hit on the right dispute, the listing could get completely removed from your
report. For instance, if you dispute the date the account was opened, and the
credit bureaus can not verify this information they may pull the whole listing.
You will need to change the reason for the investigation so the credit bureau
will have something new to investigate. Each letter of dispute must have a
different reason for disputing. That's OK, there are a lot of reasons that a
single negative item can be disputed. The order of the reasons should be (one
letter after another until the negative item is removed, but wait for the
results from the first dispute before sending the second letter, and wait for
the results from the second letter before sending the third, etc.):
Not mine (not my account)
I didn't pay late that month
Wrong account number
Wrong original creditor
Wrong Charge-off Date
Wrong Date of Last Activity
Wrong Credit limit
Wrong Status (there are about 20)
Wrong High Credit (the highest amount you used)
For example, the first time you challenge a listing, you might say the account
is "not mine." The second time through, you would say "I didn't pay late the
month that shows on my report as being late."
Tips for resubmitting your credit dispute
Be persistent! Become more insistent, but never threatening, with each dispute.
Make sure your letters are clear and to the point. Remember, an employee at one
of the credit bureaus has about 4 minutes to enter the dispute into the computer
for analysis by e-Oscar. Remember if you call the company, this resets the clock
on how long they have to get back to you. If you are on day 29 of the 30 days
that they have to get back to you and you call, the clock resets and they have
30 more days because you "provided them with more information". Just like any
other consumer, you can become frustrated and threatening as time passes. You
may mention that might hire an attorney, you may indicate that you are going to
send a written complaint to the FTC and your state's attorney general, etc. But
don’t overdo it by threatening. A polite and professional tone, while being firm
and informed, will get the best results.
Be creative - Create and utilize other techniques that help further the idea
that the dispute letter is from a truly wronged and disadvantaged consumer. The
checker is only interested in investigating disputes that truly are erroneous
Do not bombard the credit bureaus with disputes (about the same listings, that
is). Sending one dispute right after another is wasteful and counterproductive,
even if you do use a different reason in your dispute. Again, you must remember
to change the REASON for the dispute each time you submit. Otherwise, the
dispute can be deemed frivolous and the credit bureau is under no legal
obligation to take action. Also remember, that credit repair is a time-consuming
operation requiring great patience. The rule of thumb is to wait 60 days between
disputes of the same listing WITH A DIFFERENT REASON FOR DISPUTING. The process
to repair credit score is very time-consuming and there are no shortcuts available.
10. What if a removed negative item comes back on my credit report?
Ok, you’ve removed a listing and are breathing a deep sigh of relief. Then you
get a letter in the mail from a credit bureau telling you the item has been
added back on. What happened?
This is actually becoming more commonplace: since the new credit laws require
that the bureaus investigate and resolve your disputes within 30 days, they will
sometimes remove the negative information temporarily until they get the
information verified as true. Then they will put back any information verified
to be true and notify you of this. By law, they can do this, but they have to
notify you in writing.
If they DO NOT notify you in writing, it is an instant violation of the FCRA
with an $1000 fine PAYABLE TO YOU. Many of our readers have had great success
earning some easy cash by suing the credit bureaus for reinserted listings in
violation of this notification law. Not only do you earn $1000, but that listing
is removed from your report as well.
11. What if I get stuck or this is just too much work?
After reading all the steps involved to rebuild credit, you may realize that it
would be easier for you to just have an expert do the work for you. We recommend
the services of
Lexington Law. They use the exact dispute process explained above to obtain
impressive results. In fact, they delete thousands of negative credit listings
every day, and they have been doing it for 15 years.
Whether you choose to rebuild your credit yourself, or have a
professional firm such as Lexington Law rebuild credit for you, with the
lending climate and tight standards needed to qualify, a very good credit score
is more important than ever.
Rebuild Credit Resources
Listed below are a variety of additional resources
to help you rebuild your credit:
Current news stories about
documents from the FTC.