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4 Steps To Effective Credit Report Repair
By EchoBay Loans Staff Writer

Financial challenges hit people from all walks of life. One of the hardest tasks of recovering from setbacks is believing you can get control again so you can get back on the path to clearing debt, earning money and rebuilding your credit profile. Even if you've had to declare bankruptcy, you will recover. Here are four basic steps to guide your efforts toward positive credit management and effective credit report repair.

1. Find your focus.

Using the information on your credit report, decide what areas need your attention most.
Do you have late or missed payments, public records like bankruptcies, liens or judgments, or maxed out credit card accounts? There are steps you can take in each scenario, though the improvements may take some time. That's OK; you'll be surprised at how each segment of 12 months forgives past problems.

For missed or late payments, try appealing directly to your creditors. Creditors will sometimes grant a one-time retraction of a missed or late payment if the account has been kept in good standing. Write a letter or visit your creditor if possible, explain your circumstances and ask if they will remove the late payment information now or in the future after a period of on-time payments. Note that if you have kept in good contact with each of your creditors during any difficulties, you may succeed more easily with a request for removal.

If you're getting seriously behind and have several late or missed payments, consider debt consolidation. New software rules at FICO (Fair, Isaac & Company) do not penalize the credit scores of consumers who enter debt counseling for that action. Debt consolidation arranges payments with your creditors on your behalf, lowering your monthly payment and interest charges to better fit your cash flow. Debt consolidation is much easier on your credit report than many continued delinquencies or a bankruptcy.

2. Make sure you're not paying twice for the same mistake.

A common error on credit reports after a bankruptcy is to find discharged accounts continuing to report late payments in the present. These are very harmful to a score. Contact the creditors in question with copies of your discharge papers, and contact the credit bureaus with the same documentation to have those credit file entries removed.

Double reporting also happens occasionally when accounts are sent to collection. The collection company should be the only reporting entity on the account, not both the collection company and the original account holder. Go through the same contact process for creditors and bureaus if this error exists on your report.

3. Re-establish good credit quickly but carefully.

If you have declared bankruptcy, you'll want to open a secured credit card account as soon as possible. You'll pay a set amount, like $300, that will be held as collateral against any loss claims or missed payments on the account. A secured credit card that is used a little each month and paid on time, with the balance kept below 50%, will begin to bring your score up in 12-13 months. You can find offers for secured credit cards through your favorite web search engine.

Apply judiciously for any other new credit accounts. Over time, having a mix of a revolving credit card account, a revolving store or gas account and an installment loan (car, furniture or other purchase), paid as agreed with balances kept under 50% will boost your score best. DO NOT succumb to the temptation of applying for lots of new credit, even when the offers begin to roll in again, or on your holiday walks through the mall. You'll pay a score hit for each application (which causes a credit inquiry) and you'll also lower your credit score for 12 to 13 months until the account is well established.

4. Put time & patience on your side.

They say that time heals all wounds, and it's certainly true in credit report repair. If you set out with the expectation of a 24-36 month plan to fix your credit report & score after difficult experiences, you'll have more success achieving your goal.

Keep your credit activity slow & steady, without unnecessary activity during the rebuilding and repairing phase. Put as much of the new activity in the first few months as possible after a setback so that the actions that cause scores to drop will be in the past by the time your "new" credit history gets going.

The software that drives credit scores is extremely time-sensitive. Every month that you make a payment as agreed, you get closer to the ratios that will tip the balance in your favor. When you see your score suddenly rise by several points after the 12th or 13th month, it will give you the feedback you need to stay the course. Some consumers think that a bankruptcy that stays on their credit report for 10 years will hold them back for the duration. Not true; 24-36 months of wise credit behavior make a night & day difference in your score.

Each month that you pay your credit bills as agreed you come a step closer to your objective-a solid credit report & score. It is possible for you to achieve credit report repair, as thousands of consumers have done before you.

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