Can I Repair My Credit?

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Yes, you can repair your credit – but there is no magic bullet, and it will take time and discipline.  Unless a negative entry on your credit report is the result of an error or fraud, you can’t just wish it away; you have to take positive steps to improve your credit score.

Of course, the first thing you want to do is identify any negative entries in your credit report that don’t belong there.  Clerical errors, or payments that have not been recorded can be corrected by contacting your lending institution, and by notifying the credit reporting agency of the mistake.  Obviously, you don’t want to challenge anything that is legitimate.  First of all, you won’t be successful, and second, you’ll create a antagonistic relationship with the lenders and agencies you want on your side to fight real mistakes.

If you’re the victim of identity theft, you’ll need to go through various steps to prove you aren’t liable for the misappropriation of your accounts.  You’ll need to contact your lenders’ fraud departments, file police reports, and set up credit alerts to make sure the theft isn’t on-going.  Having taken these measures, you should have an easier time of convincing the credit reporting agencies that claims are valid.

If, however, the negative aspects of your credit history are of your own making, you’ll have to take the slow, serious steps to repair your credit.  You can’t “undo” the damage, but you can make future choices that offset the negative entries with positive ones.  Here are some positive actions you can take:

  1. Focus on Past-Due Accounts.  One of the biggest hits to your credit score comes from missing payments – particularly if you are overdue by more than 60 days.  Concentrate on making payments on time on these accounts and bringing them current.  The longer your accounts remain unpaid, the lower your credit score will drop.
  2. Avoid Charge-Offs and Collection Accounts.  If you neglect to make payments on your loans, eventually the lender will “charge-off” the account and pass it on to a collection agency.  If you ignore payment demands long enough, the constant phone calls and letters may even start to slow down – but your credit rating will continue to fall.  Pay these off.  Contact collection agencies and negotiate a settlement. 
  3. Debt settlements can be arranged for a fraction of the amount you originally owed, but part of your negotiation can be to request a “paid in full” notice to the reporting agencies.  The negative impact of the charge-off won’t be erased from your credit history, but the additional information showing the payment will help offset the damage to your credit score.
  4. Reduce Your Credit Balances.  Another big part of your credit score is based on how much debt you carry against the size of your credit line.  For instance, if you have a credit line of $1000, your credit score will be far worse if you owe $900 on that card rather than, say, $300.  If you find yourself charging over the credit limit, of course, your score will suffer even more, plus you’ll be losing money to overcharge fees on a monthly basis. 
  5. Cutting down on how much you charge to your credit card while doing a better job of managing your payments will take you a long way towards a better credit score.
  6. Add Positive Activity to Offset Negative Entries.  If you do have a bankruptcy, a foreclosure, tax liens, or other negative entries in your credit history, all you can do is wait them out; you can’t remove them.  You can still improve your credit score, however, by taking positive actions.  For instance, you can acquire a secured credit card (which doesn’t involve a loan at all, but rather deducts from a cash balance you provide) and maintain a good history of modest purchases and full payments every month

Remember, there is no magic wand to wave and make a legitimately bad credit history go away, and there’s no free money for you to keep.  But learning to manage your money and repaying your loans in earnest can start to turn around a falling credit score and help it head upwards again.


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