Repair your credit yourself. Free Credit Repair – Do-it-yourself tips! You can begin to improve your financial status and restore good credit right away. The economy is getting better for some but not for others. We don’t have control of some things, but others are totally in our control.
We live in a credit-based system, meaning you can not make any major purchases such as a car, home, or loan unless you can prove you are not a credit risk. What is credit risk? Credit risk is someone who has a high probability of not defaulting on a debt.
Past behavior is usually the best predictor of future behavior. Hence, three credit bureaus (Equifax, TransUnion, and Experian) monitor your financial behavior to determine if you are worthy of receiving credit or other people’s money. If you apply for credit, a lender can pull your credit to determine if you are a good credit risk. We want to show you how to restore good credit quickly!
12 Steps to Repairing your Credit
- Get your three credit reports
- Challenge wrong information
- Contact the companies you own money directly
- Keep a record of collection items (collection companies may try to re-age your debt)
- Ask for a discount if you pay the entire bill (they rather recover some money rather than nothing)
- Hire and credit repair agency to challenge your debt
- Begin to pay off your debts (your credit score improves a month or two after an item is paid off)
- Watch negative items that are close to 7 years old (they will fall off)
- Apply for a secured card (the credit bureaus do not distinguish this from a regular credit card)
- Only use your credit cards to rebuild credit (use 10% of your credit limit)
- Pay your credit card bill on time every time
- Continue to use your cards only to build credit Use credit cards, don’t let credit cards use you!
Ways to Repair your Credit
Negotiate Hospital Bills
An important part of your financial status is to make sure your bills are paid on time. When this is not possible, contact the billing department of the hospital. If you have an unpaid hospital bill, immediately make arrangements with the hospital to make payments on that debt.
An important part of your financial status is to make sure your bills are paid on time. When this is not possible, contact the billing department of the hospital. If you have an unpaid hospital bill, immediately make arrangements with the hospital to make payments on that debt.
Hospitals are very willing to work with you to illuminate this debt. Some will take as little as $25 a month as you pay off your bill. You may get a substantial discount (say 25% off) on your debt if you can pay off the whole thing. There are also online companies that you can make. You can make scheduled monthly payments and prevent interest charges.
- Speak with your hospital finance department
- Sign up with their online payment agency
- Ask how much of a discount you can get when you pay the entire debt
Credit Collections Agencies
If you have unpaid debt, it is sent to one or more credit bureaus. If you don’t want to pay to access your credit report, you can get your free credit report once a year at freecreditreport.com. Your free credit report does not give your credit scores. You can use the free services at creditsesame.com or credit karma.com if you want to know your credit score.
Record the items in collections but do not call the collections agency. Make a photocopy of the records to determine if or when a collection agency has sold or re-aged your credit. Next, call each company listed to confirm you owe the money.
Note any negative items that are ready to fall off your credit report 6 to 7 years old. Usually, any unpaid debt will remain on your credit report for seven years and then be removed. Bankruptcies remain listed for ten years. If you have items ready to fall off, do nothing. They will usually be removed without asking, but if they have not been removed after seven years for regular debt and ten years for bankruptcy, call each credit bureau to make sure they are removed.
Credit Repair Companies
You can improve your credit situation yourself, but it can be quite an overwhelming experience. If you want to help repair your credit and personal finances, you can hire a company to do this for you. They will challenge items on your credit report, monitor all your reports’ activity, and send you monthly results.
The cost varies but is relatively inexpensive ($85 to $115) instead of the fact that you will restore good credit is worth it. They will challenge each item in collections, and if the collection agency does not respond in 30 days, the item must be removed by law.
Negotiate with the Collections
Negotiate with the collection agency to have your debt removed, but get it in writing. Send a letter requesting the debt be removed from your credit report to pay off your debt. Make sure to get a signed agreement letter as proof of the deal. As old debt falls off and debt is paid off, you will begin to see an improvement in your credit scores very quickly. (Sample letter)
Improve your Finance
Sit down with your bank to request a secured credit card. It is an important step in improving your financial status. A secured credit card is established when you give your bank money that will be held by your bank and used to back your purchases. Yes, you are using your own money as a source of credit rather than other people’s money.
The great thing about a secured credit card is that the credit bureaus cannot determine it from a standard credit card. After a year, if you have used your secured credit card responsibly, you will be approved for a regular credit card. The key thing is to use your credit card only as a tool to create good credit. That means using 10% or less of your credit limit each month. Use credit, don’t let credit use you, and you will see your financial status improve substantially. If you do everything listed here, your credit score increases by a few hundred points in two years.
If you do these things, you can be improved or rebuild your credit in a year or two. This is not long, especially if you consider how long you have looked at your bad credit and have done nothing. Stop procrastinating. Your new good credit standing is waiting for you to act.