The importance of having your credit in order today is becoming more and more evident. Companies are looking hard for ways to increase their income and are often trying to do it at the expense of consumers who have little or poor credit. They find ways to justify penalizing someone with bad credit. Therefore, due to increased costs by lenders, banks and insurance companies it pays to work on improving your credit.
There are a few key issues you must understand about credit,
1) to have a credit rating you MUST use credit and that credit use must be reported to the credit bureaus. It goes without saying that you need to pay your bills on time to have a positive credit rating.
2) A large percentage of your credit score is based on credit history which means you MUST use credit every month (all of your credit usage is reported in 30 day periods). These two things are crucial to raising your credit scores.
I am not suggesting that you go into debt. I am suggesting that you use your credit card(s) to make purchases you would normally pay with cash and pay them off each month. This adds positive credit history. In every case positive credit history eventually overwhelms the negative credit on your report.
What about the bad credit on my report?
People ask me regularly about using a credit repair company to remove bad credit from their reports. My answer is “yes and no”. You can fix your own credit by contesting what is being reported on your credit report both with the credit bureaus and the actual creditors. There is a lot of information and misinformation about this on the internet. Frankly, most of it is only partially correct. My goal is to steer you in the right direction for you!
Somefolks have used credit repair companies and had great results, others, not so much. The same has been true of the do it yourself-er.
In general, to do it your self, you will need to read about the law which explains what you can request of credit bureaus and creditors (called credit furnisher or furnishers). Next you will need to construct a letter of request and send it to each bureau or creditor with the proper identification. Then it is a waiting game until your receive letters back.
Here is where most consumers stop. When a letter comes back with no changed results, folks are stumped as to what to do next. This is where there is a lot of vagueness about what to do and why in many cases it is wiser to use a reputable credit repair company. A good company can help you with both removing the bad credit and helping you build new credit. Those two things can be worth thousands of dollars to you over the years.
Lastly, understand that rebuilding your credit will take time. As stated earlier, the bureaus report every 30 days, so rebuilding credit is a month to month thing not a day to day thing! A good amount of patience is in order.