Have you ever thought about what would happen if you couldn’t secure financing for a great real estate deal, all because of your rotten credit score?
NOW is the time to think about this scenario, when times are good, so you can implement steps into your business so you never have to take steps to repair your credit rating in the future.
In some cases, bad credit is a result of irresponsible money management.
But it often occurs because of unexpected financial hardship. One day you might have all of your bills current, and the next you could be the victim of a deal gone bad or a real estate scam, which leads you to falling behind on your debts.
Once this happens, your credit rating is in the toilet.
Credit repair agencies claim that they can remove bad entries from your credit report. But did you know that you can often have them removed yourself at a much lower cost? There are two methods by which you may be able to get negative entries removed from your report.
Option #1: File a Dispute with the Credit Bureaus
The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate any item on your credit report that you dispute. If the information is found to be false, inaccurate or unverifiable, it must be corrected or removed from your report. The bureaus have 30 days from the time they receive notice of the dispute to complete their investigation.
If there is any inaccurate information on your credit report, a dispute is certainly in order.
If you decide to dispute a legitimate entry, simply write a letter to each of the credit bureaus stating that you dispute that entry. No explanation is required. But keep in mind that if the entry is verified, it will remain on your report. And if the creditor verifies the information after the 30-day time limit, the credit bureau may reinstate the entry as long as they notify you at least 5 days before doing so.
Option #2: Negotiate with Creditors
Dealing with creditors can be intimidating, especially if you’re not on good terms with them. But speaking to your creditors directly may help you get negative information removed from your credit report.
If you only have a late payment or two on your account, a creditor might be willing to remove the derogatory information once you’ve resumed a regular payment schedule. If you’ve experienced repossession or had an account turned over to collections, payment in full might persuade them to remove the negative entry. It sounds like a long shot, but you never know until you ask.
If You Can’t Get the Bad Entries Removed
There is no guarantee that disputing information on your credit report or negotiating with creditors will get negative items removed from your record. If it doesn’t, the best thing you can do is try to build up some positive information on your report.
The first thing you need to do when trying to rebuild good credit is bring past due accounts current. Try to work out a deal with your creditors to accomplish this, or talk to a credit counseling agency. But don’t miss payments on current accounts to put money toward those that are past due. If it comes down to paying one or the other, keep the current account current.
Once you’ve brought all of your accounts current, put a priority on keeping them that way. Making your payments on schedule will raise your credit score, and with the passage of time, the good entries may outweigh the bad.
Hi Trevor – Great points with the credit repair – I agree that these are good starts and very positive, easy ways to fix credit. I’d like to add though, that credit repair companies (most reputable ones) are experts with a credit report and can look at a report and know little fixes very quickly…fixes that the average person would have no idea about. And the cost of this expertise many times is way cheaper than paying the cost of bad credit. Just food for thought.