Want an FHA Loan? Resolve Bad Debts First.

Correcting your Credit Report

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If you have been unable to pay your bills on time, this fact is typically going to show up on your credit reports for 7.5 years from the date of the delinquency. This time frame for negative items to remain in your credit profile is the limit set by federal law; specifically, the Fair Credit Reporting Act. But the fact that negative items appear on your credit report for 7 years does not mean you are cut off from credit during that time. You will find that resolving delinquent accounts will likely allow you access to credit more rapidly than if you were to allow the negative items to remain on your credit reports unresolved. Settling them or paying them off may also help you avoid a lawsuit.

When you are engaged in a strategy to resolve unpaid collection accounts, you should be actively monitoring your credit reports for accuracy. If you discover inaccurate, out of date, or incomplete information, there are simple steps you can take to correct your report. Disputing bad data in your credit file is your right. No one is obligated to do it for you.

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Credit Repair Caution

When you combine the fact that an estimated 14 percent of Americans are experiencing some type of collection event due to the economic downturn, with tighter lending standards preventing many people from accessing new credit and loan products, we may see an increase in credit repair scams that had proven so problematic in the past. These firms often charge high fees in advance to supposedly fix your credit, but often don’t follow through with results. The Federal Trade Commission regulates credit repair products and enforces the Credit Repair Organizations Act, which prohibits fees from being charged in advance for credit repair services, with only limited exceptions.

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When it comes to recovering from financial setbacks and restoring your good credit, it will take planning and some time. It may not take 7 years, but you should be prepared to make wise and deliberate credit decisions until your credit is better.

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