Rebuilding Your Credit
by
Credit.com
You can’t erase the past. Negative records such as bankruptcy and collection
accounts will remain on your credit report for 7-10 years. But with a little work,
you can
improve your credit
even before these negative records expire. Here are
five easy steps you can take to rebuild your credit.
Step 1: Survey the damages
The first step to rebuilding your credit is to look at exactly
where you stand. Don’t skip this step because you think you already know what
is on your credit reports or are scared to see what may be reported. Bite the bullet
and order all three of your credit reports and all three
of your credit scores. Ordering online is simple, easy, and secure. Plus, contrary
to popular rumors, checking your own credit data never damages your credit scores.
Print each report and review it closely. Highlight any negative records or inaccuracies
that are damaging your credit score. Are all the accounts listed accurate? Do you
understand all the information listed on your credit report?
Step 2: Check the expiration dates
By law, negative records must remain on your credit report for 7-10 years. The exact
expiration date varies depending upon the type of record. Paying off an old collection
debt or discharging your bankruptcy does not remove these records from your credit
reports.
For each of the negative records on your credit report (including judgments, liens,
charge-offs, late payments, bankruptcy filings, and collection records), look up
the exact date they are set to expire from your credit report. You will likely see
a major improvement in your credit score when these records expire.
Step 3: Dispute the errors
If you find inaccurate records, fraudulent accounts, or records
that should have expired on you credit reports, you have the right to dispute these
errors. You'll need to send a separate dispute letter to each of the credit bureaus
to correct your Equifax, Experian, and TransUnion records. Read
more about how to dispute inaccuracies on your credit reports. Once your dispute
is received, the credit bureaus have 30 days to investigate and determine whether
or not to make the change you have requested.
Do not try to dispute accurate or positive information that is listed on your credit
report. Accurate information cannot be removed from your credit reports and it is
a waste of time to attempt to dispute these records. Disputing positive information
may actually harm your credit scores.
Step 4: Start adding positive information
Now that you know when your negative records will disappear
from your credit report and you have disputed any inaccuracies, you are ready to
start rebuilding your credit. Since there is no way to remove negative information
from your credit report, the best way to improve your score is to add new positive
information. Open up a new credit card
(or a secured credit card) and use
it responsibly each month. Keep your balances low and always pay your bill on time.
This credit card from Orchard Bank is designed
specifically to help people rebuild their credit after bankruptcy.
Sign up for an online banking service that allows you to keep a close eye on your
accounts. By not making any late payments, using credit responsibly, and avoiding
unnecessary applications for credit, you are building a new history of good credit
behavior on your credit report. Over time, you may want to open additional credit
card accounts or obtain a loan to boost your credit score even higher.
Step 5: Monitor your progress
It's easy to keep track of your credit score improvement with
the new types of credit monitoring programs available today. Instead of just giving
you occasional access to your credit report and email alerts, these new credit monitoring
programs include unlimited access to your credit reports and credit scores, identity
theft insurance, credit score monitoring, daily alerts, and more. You
can compare credit monitoring services and prices online here. Once you have
signed up for a credit monitoring service, you will be able to track your credit
score progress closely. Your credit score should improve steadily as you continue
to use credit responsibly and add new positive information to your credit reports.
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