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How to Improve Bad Credit

Updated on February 10, 2017

What is Credit

Credit is the ability to purchase something you want, with money you don't have! The world is run by this system, and you can not purchase anything of great substance, such as a home, boat, car without using this system unless you have access to huge amounts of cash.

In order you have good credit you must incrementally prove to the lending organizations that you are low risk can be trusted to pay back a loan. This can be done with a good work history, and the ability to show a good track record to lenders.

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How do you get Bad Credit

There is a saying that past behavior is a good predictor of future behavior. If you are unable to pay your bills or make credit card and other payments on time, you will be labeled a poor credit risk. Delinquent payments are reported to three credit bureau, Equifax, TransUnion, and Experian.

It is true, the people want credit, have to prove that they don't need it. Lenders will look at your past payment history to determine if you can be trusted with their money. Once you have established a poor credit history, you will have to work hard to restore it.


How to Improve Bad Credit

Did you know that you can improve your credit yourself? Some credit reports, have common inconsistencies, such as the date the account was opened, the amount owed, the status of the account and late payments. Negative items can only be removed, when details on your account are incorrect.

According to the Federal Trade Commission, you have the legal right to dispute anything on your credit report, you deem incorrect information. A study by the FDA has shown that almost 80% of reports contain inaccurate information.

Here are some basic steps, that can help you restore financial credibility.Bad credit can negatively affect every area of your life. It can affect where your life if you can buy a house, get a loan to start a business or get a job. It is important to monitor your credit standing, to make sure there is nothing there that should not be.

Disputing with a Financial Institution

When disputing incorrect information on your credit report, examine all three top credit reporting agencies, Equifax, Experian and TransUnion. Make a list of all negative accounts that are incorrect.

According to the Fair Credit Reporting Act, your creditor has one month to respond with proof of your debt, and if they cannot or do not respond within one month, the item/s must be removed.

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Keep Good Records

When disputing credit reporting errors, it is important to keep accurate records of the names of people you have contacted, what was agreed to and dates. Send all mail certified, return receipt requested.

Creditor Tricks
Re-aging your debt is a common practice when your original debt is sold to another collection agency. If your debt is 6 years old, it will then be posted on the date the original debt was purchased by the new creditor.

Disputing with the Original Creditor

Credit-card companies keep records from 13 to 18 months. This means, after this period of time, they cannot prove delinquency and must remove any these items challenged.

This is why it is important to have the financial bureaus fight for you before you attempt it yourself. They have the legal authority to act on your behalf!

If the creditor fails to comply with the credit dispute, they are in violation of the FCA regulation and can be sued.

Disputing Negative Items on your Credit Report

Credit Repair

Repairing your own credit can be overwhelming, especially if you have a lot of negatives your credit report. Take your time and do one or two items at a time.

Once you have a copy of all three credit reports, check every item thoroughly! If there is anything that you don't recall or is incorrect, send a notice that you are challenging that item on the report. They have 30 days to verify the item, and if they can not verify that it is accurate, they must remove it!

Eventually, you will be able to remove a number of items and improve your score and rating. Furthermore, keep track of items that are about to fall-off your credit report in a few years.

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