September 22, 2021

An Introduction To Credit Repair

Having a bad credit rating makes it difficult to get loans or make purchases that require long-term payments. Once a person’s credit rating is determined it seems as if nothing can be done about it. The very first thing that must be done before credit repair can even be started is to get a copy of one’s credit report.
Credit Repair

Under Federal Legislation, credit reporting companies, must supply anyone who asks, a copy of their credit report. This report shows a credit rating as well as reports that have been sent in regarding your dealing with different businesses. Although the various companies such as Equifax, Experian and TransUnion, might have a slightly different score, the one company that has the combined totals of all companies is FICO (Fair, Isaacs & Co). FICO takes the ratings from all the companies, combines them and comes up with a final rating.

A credit rating can range from 300 to a perfect score of 850. Lenders consider score of 690 to 720 as excellent, with 723 as the median. A score below 620 is considered risky and might cause one not to get a loan or item that requires payments.

Many times, there are mistakes on a person’s credit report. This is why it is important to obtain a copy each year and check what has been reported. Errors are made by banks and people doing business, which reflects on that report. In addition, identity theft has caused havoc with people’s credit as well as their reports.

If a mistake is found on the report, the first thing a person should do is contact the merchant, or bank, which sent in a negative report. One should not try to do this by phone, talking in person and getting something in writing is important. If they agree there is an error, this proof is paramount for the long process that is required to clear up such a problem. Taking any receipts or other proof, to the meeting, is essential, however the originals should never be surrendered. Let them make copies if they ask for them.

The next thing a person should do is contact the credit reporting agency. This will be by registered letter with a return receipt requested. The letter should state that one disagrees with the report, list the reasons, add that the lender or merchant has been contacted and enclose copies of any receipts.

If a person is in the right, and has proof of regular payments, payment in full or whatever the negative report is about that should be the end of the matter and bring a change in the credit report. If it does not one can always contact a lawyer which, unfortunately, is usually quite expensive. Many people have solved their problem by filing a consumer’s complaint with the state’s attorney general’s office.

When this is done, that office will contact both the person filing the bad report and the credit rating company, asking for an explanation as to why the matter has not been cleared up. Most people do not have to go this far but, on occasion, it does happen. There are a number of companies, on the Internet, that advertise they do credit repair. As with any other business one deals with, it is important that their credentials be checked carefully, ask for references and take every precaution to be sure it is a reputable company.

Find out more: http://www.fdic.gov/consumers/consumer/ccc/repair.html

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