When considering doing business with you, lenders and other service providers will always be interested in your credit reports and credit scores. Because most people start using credit as early as their 20s, and will continue using it for the rest of their lives, maintaining your credit health is no different from making smart long-term investments in yourself.
Life happens. Regardless of our control, there are situations that can cause credit reports to show negative or damaging information. This means that they will need repair and rehabilitation.
Depending On Your Situation, It Could Take Months (Or Years)
Credit repair is not something you can do in a few hours. It may take several years to completely repair your credit reports. The Fair Credit Reporting Act is a consumer protection statute that gives credit reporting agencies broad latitude in how long they can legally keep negative information on credit reports.
Negative information on credit reports can stay on your credit report for seven to ten years depending on its type. Depending on the type, bankruptcy information can remain on your credit reports for seven to ten years. You can remove any other negative information from your credit report for up to seven years.Late payments, collections, settlements, discharged debts, repossessions, foreclosures, charge-offs/defaults, and similar negative entries are all legally allowed to remain on credit reports for up to seven years. They are allowed to stay on credit reports only if they can be verified and are accurate.
An entry must be corrected or removed if it is incorrect or cannot be verified.
It doesn’t necessarily mean that it will take seven to ten years to fix your credit reports. You might be able to remove bad information sooner than you think, especially if the information isn’t verifiable. Credit repair doesn’t mean “removing bad stuff.” In fact, you can start repairing credit by adding to rather than removing negative information.
The credit scoring systems built by FICO or VantageScore love to see positive and negative information. Even if your credit score is not good, you can speed up the credit repair process by opening new credit accounts before you have purged any bad credit.
Credit scoring systems generally weigh more recent information. If you are able to put your mind away from the bad stuff, your scores should improve.
What Happens When You Have Poor Credit?
Everyone is unique in how they get to low credit scores and credit reports. Some consumers lose their job and are unable to continue making their minimum monthly payments. Sometimes, consumers become sick and are unable to pay their bills. This is because they have used their funds for medical treatment or care for their loved ones.There are many reasons why poor credit can occur, such as job loss and mounting medical bills.
Some consumers are unable to handle credit responsibility and learn the hard way that it can be very frustrating. Poor credit can have many backstories.
There are many ways to repair your credit. Don’t miss any payments is the only universal advice. Solid credit repair advice should not be limited to this.
What Does “Fix Credit” Mean?
Consumers often associate credit repair with credit repair firms or, more formal, credit repair agencies. These companies will challenge credit information in your credit reports for a fee.
If they succeed, credit reporting agencies will remove the offensive information or modify it.
Credit repair is legal and can be very successful. Lexington Law claims to have removed 70 million items in credit reports for its clients over the past 17 years.However, credit repair services have a price. Costs vary depending on which credit repair company you choose, how much you stay a client, and how long. Your costs will be reduced if your credit repair company succeeds in repairing your credit within a few months.
If your credit history is more stubborn than the rest, it may take longer and have a greater long-term cost.
The definition of credit repair is essentially very generic. Credit repair generally refers to improving credit quality.
You can improve the quality of your credit scores by improving the quality of your credit reports. This could mean adding or removing information from credit reports.
Credit scores and credit reports can be improved by using either one or both.
You can also decide to repair your credit yourself, instead of using a company to assist you. You can repair your credit yourself or hire someone to do it.
Many people hire service providers to do tasks they don’t want to or have the energy to do. You can hire service companies to do tasks you could perform yourself, such as lawn care, tax prep, mechanics, or cosmetology.
Is it a Good Idea to Fix Credit?
Good credit ratings will translate into good credit scores. It’s as simple as that. You’ll have a better experience dealing with lenders and other service providers who rely on credit risk assessments when deciding whether or not to do business with your.
Consumers with FICO or VantageScore credit scores of 700 or higher might be eligible to purchase a car with a zero interest loan. Zero interest means free money. A good credit score is better than having money.Customers with excellent credit ratings receive the lowest interest rates on loans.
These same consumers can also be eligible for mortgage loans at historic low rates. High-scoring customers will have their choice of the best credit cards from the top card issuers.
You may also be able to get lower insurance premiums or waived deposit requirements from both utility providers as well as property management companies. You will begin to see the financial benefits of fixing your credit.
Three Credit Bureaus Keep Your Credit Reports
It’s important that you understand the basics of credit repair before you begin your journey. Credit repair is a term that refers to the ability to repair all of your credit reports. It does not mean just one.
It’s a lot like fixing a leak in your roof by repairing one of your credit reports. It is simply not possible.
Equifax has poor credit reports. TransUnion and Experian have poor credit reports. Credit repair is a three-bureau process. However, it might not be triple the work or triple the time required, nor triple the cost.There is a pattern to correct credit report errors. If you file an dispute with one credit bureau and it corrects credit file information, these corrections will likely make their way to both credit bureaus.
Informally known as carbon copy, this process eliminates the need to go through the entire repair process three times. You can also choose to file disputes directly with the furnishing party (usually a financial service company or debt collector) and skip the credit bureaus.
If the furnisher admits to a mistake, it must correct it everywhere and not just with one credit bureau. If XYX Bank finds that the information they sent to Equifax and TransUnion was not correct, it must rectify it with Equifax and TransUnion.
Even though this is the way it works, it’s a good idea to verify and trust your gut. After you feel you have completed the credit repair process, you can pull your credit reports from all three credit agencies. You can do this for free at www.annualcreditreport.com.
Summary
You will need patience and realistic expectations if you want to begin a credit repair journey. Credit repair can take years if your credit reports are filled with inaccurate and verifiable information.
However, if your credit reports contain only a few older negative marks it might only take a few weeks for you to repair your credit.
It doesn’t matter how long it takes. You should do it. You’ll be able to have more money in your pocket because of good credit.
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