Step 1: Get your credit report and score online.
There are several sites that offer credit repair services, the one I like most is Myfico, this is the only site that offers you a real legitimate FICO score (the score most lenders use). All other sites use their own internal scoring system which will get you close to your real FICO score but is almost always off 10-30 points up or down from your actual FICO score. These types of scores are commonly referred to as FAKO scores. If you’re trying to keep this budget-friendly, avoid Myfico. Most other sites will offer a free 30 day trial period for a “3 in 1 credit report with the score” and as long as you cancel within the trial period, it’s free!
It’s absolutely important to get your report from all major credit bureaus: Transunion, Experian, Equifax, Innovis. You want to get your report from all of them because they are almost always different from each other for various reasons. A couple of reasons to mention is not all lenders report to all consumer reporting agencies and they are not required to do so. Also, there may be an error in 1 report, but not in any other, so it’s vital to get them from all the major reporting agencies. Transunion, Experian, and Equifax are all readily available online, whether you want to dispute something online or just to view your credit report, those 3 are fast and simple to use online. Innovis is more like a silent reporting agency, they are fairly unknown to most people and it’s not possible to get this report online until you call them up and request your report to be mailed to you. Innovis is pretty good at sending your report to you, usually taking about 5 business days to receive it. Once you do receive this report, they will include a username and password to log into your account online. So you will have to wait and go through a few hoops but nothing to difficult.
Step 2: Review your Report.
Take your time and go over everything in your report. I noticed in my own Experian report that I had a second social security number (which isn’t true) and once I disputed it, Experian removed it. A small error but if you were a lender would you feel comfortable seeing someone with multiple social security numbers? I went over everything line by line and highlighted any possible errors in each report.
Step 3: Dispute Errors
You can dispute errors online with ease, just click on the dispute icon and dispute all items you feel is an error. The reporting agencies will email and/or mail the results of your dispute usually within 30 days.
Step 4: Negative Items
You can also dispute negative items, such as a collections account. If these collection accounts are 3 years or older chances are the collection agency will not go through the hassle of verifying the information needed and as a result of that, the credit reporting agency is required by law to remove the negative account. This isn’t always the case, but there is a chance a removed item could be the result. Even if you believe you owe this money, you can still dispute it, all you are doing is making sure the collection agency has the right to collect on this account.
If the collection account comes back as verified and remains on your report, don’t give up. There are several more things you can do to resolve this issue. The best thing to do is offer to the collection agency a “pay for delete.” Basically, you pay a settled amount or in full, and in return the collection agency will remove this negative item from your report. Some collection agencies will make that deal right away, some will say they cannot or will not do that. All will eventually work out a pay for delete, no matter what they tell you. No matter what they say, do nothing until you get it in writing, and never trust them. 1 example I can give you: I had a medical collection account on my report from 4 years ago; I called them up last year to offer full payment for deletion of this account, they told me no. 3 months later, I offered to pay them 80% of the bill, if they delete this from my record, they said no. I tried this every 3 months or so each time lowering my offer 10-20% and almost a year later I got a call from them. They offered me a deal I couldn’t pass upon. Pay 40% of the bill and they will delete this from my record. The point is, do not seem desperate or over-eager to resolve this if they aren’t willing to delete the negative account, do not be willing to pay it. Eventually, they’ll be willing to play ball, and at that point, get it in writing. After you receive this offer in writing, pay the agreed amount needed to delete it off your report. Never pay with a personal check, personal credit/debit card, just send a money order to them. This way, your personal banking information is not in the hands of a collection agency.
I’ll write another article “Dealing with Collection Agencies” to go further into details on how to work out the best deal possible with them.
The best thing you can do is be active and don’t ignore issues. However, if all else fails, negative accounts usually drop off your credit report in 7 years. Certain types of negative information like bankruptcy and tax liens may remain in your report longer, usually 10 years. Two years ago, I had a lousy 580 FICO score and though it wasn’t a quick fix, I was able to build from that 580 up to a 767 in just 2 years. You can do the same, perhaps even better. Look for my article “Dealing with Collection Agencies” for more insight on how to make the best out of a negative account.