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So before we get into credit report repair, let’s explore WHAT a credit score is.
Quite simply, as Dave Ramsey is fond of saying, your credit score is an “I love debt” score.
A credit score in no way measures your net worth or is a sign you are winning financially!
In other words, let’s say you had a million dollars in the bank. And let’s say your house and cars were paid for and you only used cash or a debit card to buy stuff. At that point, your credit score would be ZERO. Yes, a score of zero! But that’s not as disastrous as you might think!
A good credit score, defined: https://t.co/56dXDDEGj9
— Cardinal Real Estate (@CardinalRE) September 2, 2016
Your credit score is an algorithm arrived at by a private company commonly referred to as FICO. They look at the following criteria and then come up with a score:
- Payment History (how many times have you paid a bill late or not paid)
- Debt Ratio (how much you owe versus how much your income is)
- How Long Have You Been Using debt (you are perceived to be a bigger risk when you get your first loan or credit card)
- Type of Debt (they rate you higher if you have revolving credit (ie: credit cards) versus just a mortgage or car loan)
- Credit Inquiries (how often are other companies requesting to look at your credit – the more of these, often the lower your score)
The first 2 lines here represent the biggest components of your score, but all of them play a role.
What is a “good” credit score? According to FICO its . . .
- Excellent : 760-850
- Very Good : 700-759
- Good : 660-699
- Fair : 620-659
- Poor : 580-619
- Bad : Below 580
Do credit repair companies really work?
So before we get into what YOU CAN DO for credit report repair, let’s first take a look at credit repair companies. There are a lot of them out there, and make no mistake . . .
THEY MAKE A LOT OF MONEY EVERY YEAR BY CLAIMING THEY CAN:
- Erase bad credit
- “Fix” your credit score
- Clean up collections
The short answer credit report repair is not magic. Genuinely paid someone late? (and I’m talking a credit card, bank loan, etc as most of the time landlords and utilities aren’t reporting lateness.) Didn’t pay at all (or at least not in full).
Then there is NOTHING you or anyone else can do to make that magically vanish from your credit report. Generally speaking, things like lateness or unpaid debts take 7 years to fall off your credit report and bankruptcies take 10 years. But don’t take my word for it!
Take it from the Federal Trade Commission’s! But having said the above, that doesn’t mean the situation is hopeless.
There are steps you can take for credit report repair without paying anyone!
As we mentioned above, the 2 things that are the biggest factors in your score are how many times you paid a bill late or didn’t pay at all AND how much you owe vs. how much you make.
The latter is easy to control; stop borrowing money, take on a 2nd job or move to a better paying job and the rest will take care of itself. The PAST lateness is not something you can affect much control over.
If there were circumstances that caused the lateness that were out of your control (like the company didn’t mail/email you a bill that month and you forgot to request it), you may be able to negotiate. But start paying on-time now!
In those cases you can email the company and explain the situation and request an adjustment. Now bear in mind that email initially probably goes to some kid fresh out of high school making minimum wage.
Do you think he cares about your situation? Probably not! (no offense to high school kids making minimum wage; I was one). So in these cases, you probably will have to email/call multiple times, to multiple people.
If you think I’m suggesting you pester people, you’re right! If your argument has any merit, they likely will change the history just to make you go away.
NOW WHAT ABOUT BILLS YOU DIDN’T PAY?
This is a much bigger factor with credit report repair! It implies you are a high risk since clearly you have a history of not paying money you owe. There are a few things to remember when dealing with these situations:
- If you borrowed this money you should pay it back! (it’s simply a matter of integrity)
- If it’s a loan you co-signed and the person who was supposed to pay it didn’t, you should pay it and learn your lesson! (don’t co-sign loans)
- Don’t pay a creditor ANY money until you get the following in writing:
- How much they agree to accept to close the account and consider it paid in full
- That they agree to remove ALL entries from your credit reports with ALL credit bureaus pertaining to this debt within 30 days of receiving your payment (a great way to bump your score up and bear in mind their only goal is to get your money; they don’t care what’s on your report. As long as you owe them money, that gives you LEVERAGE!)
- They understand you will be paying by cashier’s check or money order and mailing the payment
- Often times these creditors will sell your bad debt to a collection agency. So make sure you know who you currently owe the money to as it may have changed (you don’t need to waste time negotiating with the wrong company and you sure don’t want to send money to the wrong company)
- Company harassing you? You have rights under the Fair Debt Collection Practices Act and you can report them right HERE!
- Don’t give ANYONE your bank account/credit or debit card info under ANY circumstances! (it’s not uncommon for companies to charge more than you agreed to)
- Time to pay? Get a money order or cashier’s check and snail mail it!
Now if that seems hardcore, that’s because it is. I’m not knocking everyone out there who lends money, but some of them are simply looking to make a buck at the expense of someone else who hasn’t done a great job of managing their finances (been there, done that).
These folks can be the lowest of the low and will say anything to get you to pay and while I do want you to pay a debt you genuinely owe, once it’s gotten to this stage, it’s vitally important that you do it the RIGHT WAY!
So first, let’s start with #3.
Who do you owe the money to?
That can be tricky, especially if they have stopped contacting you or it’s been over a year since your last payment. There are companies out there who buy so-called “bad debt” for pennies on the dollar from the company you originally had the loan with.
Why would they do that? Say they buy a bad debt for $75 when the total amount you borrowed was $500. They know if they harass you long enough they can probably get you to pay. Since they are hiring people at minimum wage who do the hard part, that’s easy money. These people are often your biggest obstacles in credit report repair.
Even if they only get you to pay half of what you owe ($250), they still more than tripled their money!
— Dsouza Legal (@dtdlaw) September 4, 2016
If you are no longer getting bills or receiving calls or emails, and it’s been a few months or longer, chances are your debt has been sold. So we need to figure out where that money is currently owed to.
At this point I would suggest getting a copy of your credit report; the ultimate resource for credit report repair.
You can’t get where you want to go without knowing the way, and your credit report is your road-map.
Now, don’t just Google “free credit report” as a million sites will come up and 99% of them AREN’T REALLY FREE!
I know its shocking to think that someone would lie on the internet, but it’s true.
There are only about 3 ways to get a FREE copy of your credit report:
- Apply for a loan and get denied (in their denial letter they will explain which credit bureau gave them your info which led to them denying you and you have a right to get a copy of that report at no cost and the letter will tell you where to write to request it)
- Get a copy when you buy a house
- Get a copy for free, no more than once per year, from this website: https://www.annualcreditreport.com/index.action
The one I recommend you do is the latter; it’s quick, easy and free. I keep mentioning credit bureaus, so if you don’t already know what I mean, there are 3 primary companies in the United States that creditors (the folks you owe money to) report the bad (and sometimes) good stuff to.
These are the people in charge of your credit score. If you need credit report repair then you need to know who they are.
The 3 big credit reporting companies are as follows:
I don’t suggest contacting these companies directly at this point, but they do have online dispute processes to correct incorrect information and we’ll get into that shortly.
How to read and understand your credit report
Now you should have your credit reports. These can sometimes be a bit confusing to navigate if you’ve never looked at one before. Each of the 3 will look a bit different and may contain different things.
I’m not going to get into HOW to decipher your credit reports from each of the 3, but if you don’t understand what you’re seeing, just take a look at these video tutorials:
So in reviewing your credit reports you’ll see every address you ever lived at, probably a few addresses you never lived at (possibly the address of an ex with whom you once shared credit or someone with the same first and last name as you).
You don’t need to worry about addresses as they aren’t likely to affect your score.
Focus on the following when reviewing your reports:
- Who you currently owe money to (make sure it is correct and that the amounts match your records)
- Who it shows you have made late payments to (again, make sure that is correct as most of the time companies that report lateness here aren’t necessarily informing you)
- Who and how much it says is in default (unpaid) or in collections
These are the things that are driving your low credit score. And the primary things you can affect change on when performing credit report repair.
How do you improve your credit score?
— Persofina (@persofinatips) May 11, 2017
If you were to pay a credit report repair company to improve your credit score, they would focus their efforts on these same things (but you can do the same things yourself for free!)
So if you see debt or a collection you don’t recognize, start by contacting the company listed and requesting proof that the debt is yours. Sometimes debt gets sold and you may not recognize the company who currently owns it. Thus it may not be clear on your report as to who the original creditor was.
But it IS possible it’s NOT your debt and was listed as yours by mistake!
Any type of communication like this, while it’s OK to make follow up phone calls, I prefer to do most in writing (ideally email so you have a paper trail of exactly what was said).
If you have to snail mail then I suggest sending via certified mail so you have proof you sent it on a certain day and you have proof of delivery (or attempted delivery).
Keep copies of ALL communication!
While we make that inquiry, we are also going to dispute it with any or all of the 3 bureaus where it appears (it may not be on all 3).
Also be aware that while bad debt only stays on your report 7 years, every time it gets sold (which can sometimes be more than once or even several times) it can sometimes start that 7 year cycle over each time, so it’s always best to get these debts cleared up so it doesn’t haunt you years or even decades later.
How to dispute your credit report with the credit bureaus
As we said above, there are 3 main credit bureaus. Credit report repair pretty well begins and ends with them. All 3 have online processes for disputing information you believe to be incorrect. So click the links of each to get started.
I would dispute anything you see that is wrong or anything you are unsure of the accuracy on or anything you don’t recognize. These are the key steps in credit report repair.
You may be able to dispute things like an incorrect address or employer. But since those aren’t likely to affect your credit score, I wouldn’t waste my time on them.
In most cases, they will open an investigation and contact the creditors in question. The creditor typically has 30 days to respond.
Most large creditors (think big banks and lenders) will most definitely respond. They have whole teams of people who just do this type of “work”.
Smaller companies who are less efficient, less ethical or perhaps understaffed may not get to it in time. This can work to your advantage as the big 3 bureaus will almost always side with you if the creditor doesn’t respond.
If you are contesting a debt you believe you have paid, definitely include any supporting information. Things such as statements from the creditor showing a zero balance, payment history from your bank or online payment system receipts, etc.
The more evidence you have to support your claim, the more likely your request will be granted. Every win, however small, will give a little boost to your score.
But also bear in mind it can take 30 days or longer for changes to actually affect your score, so this is not an endeavor to undertake right before a big purchase;
This is long term strategic planning for credit report repair!
In any case, I recommend reviewing and disputing (if necessary) your credit report about once a year. After all, credit fraud is always on the rise. Only if you are contacted or see it on your credit report would you even know if someone borrowed money fraudulently in your name.
Looking for a great Identify Theft monitoring service? I recommend IdentityForce,; identity protection so strong, the Federal Government uses it! They are also 2017 People’s Choice Stevie Award for favorite product.
And if you believe yourself to be a victim of credit fraud, check out the government’s page HERE on what you can do.
Bear in mind that many or sometimes all of your disputes may get denied. After all, the credit bureaus are more aligned with the creditors than they are with you.
One additional way you can apply leverage is to post negative reviews for these creditors or collection agencies. If they have posted incorrect information about you on your credit report, and you have tried to work with them to correct it, you have every right to review them online.
I WOULD NOT recommend doing so unless you truly believe you are in the right. If you messed up (been there, done that), take your lumps, apply the strategies I’ve outlined above where applicable, learn from your mistakes, but most importantly . . .
OWN YOUR MISTAKES!
We don’t get ahead in life by blaming everyone else for our problems. As long as we convince ourselves we are a victim, we remain a victim. And even though it’s true that sometimes people or companies do take advantage of us, unless you’re being held at gunpoint, they didn’t do it without your permission. Plus, Failure CAN inspire you to greatness!
But back to slamming debt collectors on the internet!
OK, I’m being a bit dramatic there just for fun.
As with any communication, I always recommend you be the following:
- Honest (if you only tell the truth in life, it makes everything that much simpler)
- Accurate (again, don’t omit information to make yourself look better and don’t exaggerate the bad stuff to make them look worse; just the facts, ma’am)
- Detailed (if you want to convince someone your case is valid they need to know specifics)
- Professional (imagine your Mom or kindergarten teacher is reading it. Would they be proud of you?)
I recommend writing reviews based on the above on their Facebook page (if they have one). But also on Yelp (if they have one and you’ll need to know their home city). Lastly, possibly most importantly, lodge a complaint with the Better Business Bureau!
While the BBB is a member site and they can sometimes favor their members (ie: the businesses you have a complaint against), most companies value their BBB reputation and will try to resolve complaints to keep their score up.
It can also be helpful here to know their home city although sometimes just searching by their web address works too.
One thing to check on the BBB is their current score and their history of complaints. If you see their score is low (as in “F”) that can tell you they don’t value their reputation with the BBB in which case it may not be worth filing the complaint (but I would probably still do it).
I was able to get incorrect info removed, the ultimate fix for credit report repair, after 3 years and multiple attempts with the 3 credit bureaus. I had plenty of documentation to support me too.
In the end I simply by lodged a BBB complaint and that was what worked. I won’t name them here, but think one of the top 3 big banks.
How do you perform credit report repair? Patiently!
Patience Iago…patience… pic.twitter.com/UuOnTQH0Ad
— ChrisCURSEDMedia👻🎃 (@ChrisCrossMedia) April 26, 2017
Once you’ve tried all the steps above you just need to be patient at this point. It may be worth trying again in a year if you don’t get the results you want. Remember with these folks it pays to be tenacious & consistent.
You should always be professional (even if they aren’t) But a good pestering can go a long way in making them want to do what you want so you go away.
These folks pester people for a living, so there’s nothing wrong with giving them a taste of their own medicine. While you can perform credit report repair yourself at no cost, it’s not always quick and easy!
What if you can’t afford to pay outstanding debts?
When we’re living paycheck to paycheck, we’re often too overwhelmed to even think about credit report repair. But we need to think big picture. Think about the long term and where you want to be in 5 years.
If that’s the boat you’re in, check out check out 5 Steps (and 50 Tips) to Stop Living Paycheck to Paycheck from my friends over at the CreditLoan.com website.
If you’re behind on bills (also been there, done that), while I do think that as a matter of integrity you should pay back what you owe, sometimes we find ourselves in a jam.
If you want some cash quickly and easily check out recent post about 21 Ways to Earn Extra Money!
But let’s say you have an old debt that was once $500. But you didn’t pay it for 5 years. Maybe you have moved a few times and the debt has been sold a few times. And now the current company is threatening wage garnishment, court judgements, etc and they claim with fees and penalties that the bill is now $2000. If you think stories like that don’t happen, think again.
In this situation it’s important to:
- Stay Calm (after all, they are trying to scare you into paying)
- Know that they just want money (and many will say whatever works to get you to do that. Even things they likely have no intention of doing such as suing you)
- Remember, as I point out above, you have rights (and you should report anyone who threatens you)
- Know that EVERYTHING is negotiable, no matter what they say. That debt you owed of $500 that they now claim is $2000? They probably bought that debt for $100 (maybe less). They WILL accept a LOT LESS than $2000 to settle it (but they aren’t going to tell you that).
- Know that if you truly have no money, they will find that out and not waste time going to court (because they know they won’t get anything)
In these cases your goal would be to ideally pay what you originally borrowed (and they will still likely quadruple their money). It may take multiple calls or emails and talking to multiple people,
But you can negotiate everything.
If you have multiple outstanding debts and limited funds it may be time for a 2nd job or lifestyle trim. But I would list your debts smallest to largest. Just focus on one at a time starting with the smallest, ignoring (temporarily) calls or letters from the others debt collectors.
You clean up one and move on to the next. Dave Ramsey calls this his “debt snowball” and while he typically refers to current outstanding debts, it works for debts in collection too.
OK, so I know I’ve covered a lot here so let’s simply review my . . .
11 Proven Credit Report Repair Steps You Must Take!
1. Get Your Credit Report
- Get a free copy of your credit report from all 3 bureaus
2. Dispute Inaccuracies!
- Contest any inaccuracies or entries you don’t recognize that you find on your report with the reporting agencies
- Also lodge disputes with the companies who posted the wrong information
3. Don’t pay anyone yet!
- Don’t give anyone anything until you get an agreement in writing
4. Pay Smart!
- Don’t give anyone your bank or credit/debit card info; always pay outstanding debts by money order or cashier’s checks and snail mail them certified mail!
- Be consistent, tenacious, professional and don’t be afraid to contact credit bureaus or collection agencies multiple times so they know you aren’t just going to take no for an answer
6. Pay what you owe
- Always honor agreements as a matter of integrity (but if it’s in collections, make sure you follow the above steps to minimize damage to your credit)
7. Stop borrowing money
- Other than for your primary home’s mortgage
8. Boost your income
- Take on a 2nd job or find a better paying job to boost your income/debt ratio or to get extra cash to pay down debt
- Check out my 21 Ways to Earn Extra Money quick & easy!
9. Review Companies who have wronged you
- Don’t be afraid to review businesses on social media and lodge a complaint with the BBB if you feel you have been treated unfairly
- Keep repeating all of the above as often as necessary to get it cleaned up!
11. Don’t bury your head in the sand!
- As with anything important, information is power and not knowing can cost you a lot! Don’t procrastinate!
- If you know there’s trouble out there, the faster you address it, the faster it goes away. It doesn’t just go away on it’s own!
Tired of ending up at the end of the month with more bills than income?
Need help managing your family’s finances?
Wondering where all your hard earned dollars go every month?
Get a copy of my monthly budget spreadsheet, the very same one my family has used for about 7 years, right here!
Have a credit report repair question you need help with? Want my specific opinion on your credit score? Tried one of these strategies and found success or failure? Tried something else that worked?? I’d love your comments or emails!
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Photo credits (that aren’t mine or which require attribution):
Loan Officer by Mark Moz (modified by me) is licensed by Creative Commons
Technological Innovation by Sam Catanzaro (modified by me) is licensed by Creative Commons 2.0
Credit Dispute by Credit Credit is licensed by Creative Commons 2.0
The Scam Truck by Jean-Etienne Minh-Duy Poirrier is licensed by Creative Commons 2.0
Of course I have to add in that this post, like all my personal finance posts, is not intended as “financial advice”. I offer my opinions based on my experience, research and my own mistakes. Thus if you need financial advice you should seek out a professional in that area who is legally authorized to give financial advice.