Much of your financial profile is tied to your credit score. After all, a low credit score can limit your opportunities in several areas: taking out loans, renting or buying a home, getting lines of personal credit, business credit or even getting a job.
Even if you’ve reached a position of relative security in your finances, your credit report may still have negative information that’s holding you back. Some of this information might be unverified, inaccurate, outdated, and/or incomplete.
In this guide, we’ll talk about the basics of do-it-yourself credit repair. We’ll explain how credit reports work, how to get the information you need, what procedures you need to follow, and how Awesome Life Group LLC can replace your DIY credit repair if needed.
The Basics of Credit Reports and Scores
Two elements make up your credit profile: a credit report and a credit score. Many consider those items to be the same thing and use those terms interchangeably. But in do-it-yourself credit repair, it’s best to think of them as related but separate entities.
The report is a summary of your credit history and current debts. It’s essentially a profile of how you have managed your credit use and payments. It covers credit cards, student loans, car loans, mortgages, and other long-term debts. The credit report also includes collection activities and bankruptcies if you’ve had them.
A credit agency takes all the information from your credit report, feeds it through an algorithm, and comes up with your credit score. This figure is calculated according to five elements of your credit report:
The most influential part of your credit score is simply how regularly you’ve paid your credit bills on time.
This describes how much of your total credit limit you use. Most experts say you should never use more than 30% of your credit limit, if possible.
Credit History Length
When did you start your credit accounts and which ones do you still use? The longer you keep a credit account open and up to date on payments, the better it looks.
New Credit Applications
Anytime you apply for a new credit account, the creditor makes an inquiry on your credit record. Each individual inquiry may have a negative effect on your credit score.
Diversity of Credit Accounts
Reporting agencies favor those who keep a healthy “credit mix” — regular, secured debt obligations like mortgages or car payments, plus a few credit cards.
DIY Credit Repair Step 1: Get Your Credit Report
Since your credit score is computed according to the info on your report, the first step in DIY credit repair is getting your hands on that report.
Actually, you’ll be reviewing three credit reports, one from each of the major credit bureaus: Equifax, Experian, and TransUnion. All keep tabs on your past and present credit activity, and the information they have on you may be different from bureau to bureau.
You can get your credit report by contacting Equifax, Experian, and TransUnion through their websites. You’re allowed to receive one free report from each agency every 12 months.
One common do-it-yourself credit repair strategy is to make one such request from one such agency every 4 months, so you can keep a "running" overview on your credit with the most recent items.
You can also get your credit reports for free at AnnualCreditReport.com Or you might want to use another credit monitoring service of your choice. Once you have your credit reports, it’s time for the fact-finding part of your do-it-yourself credit repair plan.
DIY Credit Repair Step 2: Look for Errors on Your Credit Report
Arguably the most crucial step in do-it-yourself credit repair is making a close examination for every bit of unverified, inaccurate, outdated, and/or incomplete.
Why is it so important to find errors? Because potential creditors are looking at your credit, making decisions whether to extend you a credit line based on what they see. And as much as 25% of all credit reports have errors that are consequential enough to make them deny you that credit.
With the credit report in hand, scour it for every mistake — no matter how small or insignificant — and note each one.
Errors you should look for include:
Unverified Negative Items
Items like charge-offs, collections, repossessions, foreclosures, bankruptcies, evictions, and late payments are negative items or derogatory items.
You are allowed to dispute unverified negative items demanding verification. It is your right to have items be one hundred percent verified and if an item can not be one hundred percent verified it must be deleted from your credit reports.
You can dispute these negative items or we can do it for you by sending the dispute letters on your behalf.
Incorrect or Missing Accounts
Look for accounts that don't belong to you or ones that you've never opened. Also, look for accounts inaccurately shown as being open after they’ve closed, duplicate accounts, and accounts that were “closed by grantor” (i.e., the creditor closed the account instead of you).
Conversely, you should also look for credit accounts that should be on your record but aren’t. Remember, the goal of do-it-yourself credit repair is to improve your credit reports and credit scores so if you have positive accounts not on your reports you can have that added on as well.
Inaccurate Personal Info
Find and note name misspellings, incorrect addresses, and contact information, old phone numbers, outdated or wrong workplace information — literally any casual mistake that made it to your credit report.
Although these dings don't necessarily harm your credit score, they could affect your credit applications. A potential lender who sees conflicting or incomplete information may make the process harder.
Inaccurate Public Records
Public records have a serious impact on your credit score and they include bankruptcies, and civil judgments involving monetary penalties.
Of course, if you’ve never had any of those court actions but some appear on your record, you have to make a note of that, too.
You can also demand verification of any unverified accounts.
Activity You Don’t Recognize
Identity theft is real, and the most common form of it is credit card fraud. If there’s a transaction on your credit record that you know you didn’t have, it could be the result of fraudulent activity.
Incorrect Hard Inquiries
Your credit report will show every time an outsider has made a hard inquiry about your credit information. If some of these inquiries look suspicious or inaccurate, you can also dispute them.
Outdated Derogatory Marks
Collections, repossessions, foreclosures, bankruptcies, and missed payments are known as “derogatory marks” but depending on the marks, they are only allowed to stay on your credit report for a max of usually seven years (ten years for Chapter 7 bankruptcies). If you see any such items older than those limits, you can dispute them. Or we can dispute them for you.
Find all of the errors you can and detail them as much as possible. You’re entitled to dispute every unverified item, inaccuracy or mistake on your credit record.
DIY Credit Repair Step 3: Dispute the Errors
Once you’ve collected all of the errors or expired items, your next step in do-it-yourself credit repair is to formally dispute them.
Write Out and Send Your Dispute By Mail
Write a formalized account of your credit report dispute, attach all relevant supporting information, make and retain multiple paper copies of all materials, and send the dispute directly to the agency via the U.S. Postal Service or delivery carrier. Make sure your delivery includes confirmation of receipt of your dispute by the agency.
This tried-and-true option is still the most effective way to dispute one’s credit report.
The big advantage to this do-it-yourself credit repair strategy is that it creates a paper trail of your dispute and dealings — one that can’t be wiped out by a computer failure or data hack. Should the issue escalate to legal proceedings, you’ll have hard copies of your records and supplemental information that you can simply hand over.
This method of sending letters may take a little time as the bureaus, creditors, and collectors have 30 calendar days to postmark a response from when they get the letters, but it’s superior to rushing through an online process and inadvertently waiving your consumer rights.
Keep Current Accounts Open
You may be compelled to close certain credit accounts while you're repairing your credit. But if they're in good standing and you control your use, and you can keep them open, keep them open. The longer they're active, the better it is for your credit score.
Request Higher Credit Limits
One way to improve your credit utilization is to ask your creditors to raise your credit limits. If you can, try to make sure you don’t get a hard inquiry form the credit line increase. If they do agree to a credit line increase it can reflect well on your credit profile. Just make sure the higher limit doesn’t tempt you to take on more debt and again try to avoid getting a new hard inquiry for the credit line increase, if possible.
Keep Up Regular Repayments
The best strategy, of course, is to pay off your credit lines on time. When agencies see a sustained, consistent record of debt repayment from you — even after a period of difficulty — they’ll be more favorable to your credit score.
The Awesome Life Group: Your DIY Credit Repair Partner
Do-it-yourself credit repair involves a lot of research, fact-gathering, documentation, and hard work. But you don’t have to do it all by yourself.
Awesome Life Group LLC helps people who want to repair their credit by taking the steps in this article — obtaining reports, finding errors, writing correspondence, and all of the small but significant details that may come up. Let the Awesome Life Group LLC get you started on the road back to financial health. Contact us today to find out more.