The Basics of
Credit Repair
It’s difficult to rebuild your credit if you don’t know the basics. Because they don’t know where to start, many people choose to bury their heads in the sand when it
comes to their credit and not do anything at all.
But that’s a mistake.
Ignoring your credit can mean you are passing up a solid financial future. Your credit score gives you the ability to make purchases you may not otherwise be able
to make. For instance, if you are not in the position to pay cash for your home and purchase it outright, then your credit score can be an important factor in a banker
deciding whether to approve you for a mortgage so you can pay for your ho me over time. Without credit, that purchase would be impossible.
So what are the basics of credit and credit repair?
First up, learn the terminology. When looking at your credit report, you may notice collections or charge-offs. Learn the definitions of these and other credit related
terms so you can know what these designations mean.
Another basic action you must take in repairing your credit is pulling your credit report. Take the time to get a copy of your credit report. You are eligible to get a
free copy of your credit report from each of the top three credit reporting agencies, Experian, Equifax, and the TransUnion, once every year. You can go to
annualcreditreport.com to order your credit report. Most people don’t take advantage of this opportunity, but doing so can help you get an accurate picture of what
your credit looks like. You can also get regular notifications about your credit by signing up for a credit monitoring service that can alert you to changes in your
credit.
When you see your report, you can dispute inaccuracies, and if you are successful, you can have them removed. These inaccurate reports of negative information
can drag down your score, so challenging them can help boost your score.
Many people may be surprised to realize that it’s not uncommon for inaccurate or unlawful information to be on a credit report. They assume whatever is on there is
correct. And that’s not true. I recall a case where a woman came to me because a law firm was suing her for payment of debt. I walked her through the process and
what she should say in court and the case was thrown out! So don’t assume that a creditor is right. Fight for your financial freedom.
Another basic move you can make to rebuild your credit is to start paying your bills on time! Payment history — whether you pay your bills on time — counts for 35
percent of your credit score. That’s a good chunk! So if you continue to fall behind on bills, you will continue to see a poor score. But being disciplined enough to
make all payments on time can turn things around.
If you find that you can no longer maintain the agreed-upon payment schedule, reach out to your creditor and discuss the possibility of a new payment schedule.
Many creditors will work with you, if you are proactive and approach them about setting a payment schedule you can keep. Remember, they want to be paid. And if
you have a payment that is too high or payments are due on a day that doesn't work for you, it’s possible making adjustments here can help you pay them.
If income is the problem, look at ways you can bring in additional income. This may mean getting a second job, going for a promotion, or even starting a side
business. Generating additional income each month can help you to make your payments on time and can also help you start to dig out of any financial hole you
may be in.
While it’s possible to rebuild your credit, no matter how bad it is today, don’t expect it to happen in 24 hours. It can take much time to have inaccuracies removed
from your credit report or for on-time payments to start to show up on your report. But with diligence and time, these changes can happen.
Your credit is something you can’t get away from, so ignoring it doesn’t make it go away. You can take these basic steps to improve your credit, so you have better
financial opportunities.
Chayo Briggs is chief financial officer of Briggs and Lay Pro, Inc., a real estate investment company. He helps consumers rebuild their credit and gain financial
freedom. For more information about how he can help you rebuild your credit, send inquiries to [email protected] or
(800) 216-8871.
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