It’s probably fair to say that many of us don’t give much thought about our credit score until something goes wrong. At some point, it could become apparent that there are problems on your credit report—maybe you missed a payment or got turned down for a loan. Some people have already worked with a credit repair service to fix errors on their report. If you’re one of them, it may be tough to determine whether or not your score was positively impacted by their work. Understanding how credit repair works is an important step in getting an accurate view of your financial picture. You can get started by reading through these frequently asked questions.
There are lots of misconceptions about credit reports and credit scores, making it difficult for Americans to know what’s really going on with their financial health. One common myth is that your credit score affects your interest rate. It doesn’t. Interest rates are based on your credit score but not vice versa. If you have a lower credit score, you may have a higher interest rate because lenders perceive you as more risky, not because they can afford to charge more.
No, having open accounts does not boost your score (and thus isn’t helpful if you’re trying to boost your score), since it won’t help you pay off past-due accounts or get rid of collection actions. Are creditors required by law to give me my credit report?
The single best way to clean up your credit report is by requesting your free annual credit reports from each of the three major credit bureaus. Each year, these agencies are required by law to provide you with a free copy of your credit report. While you may have taken advantage of this before, be sure to request all three individual reports, as some errors appear on one report but not another. The websites for each bureau are listed below. You can also follow these links if you’d like specific advice on how to read your reports. This USA Today guide explains what information falls under what category on your reports, while NerdWallet’s chart provides an overview of who uses which ratings system.
You can start by correcting any mistakes on your credit report. If you feel there are errors, contact each of your original creditors individually and ask them to verify whether or not their information is correct. Many times, even if there’s no error with your account, simply informing an organization that you’re planning on applying for credit will prompt them to respond favorably when it comes time for you apply. If you plan on getting a home loan or signing up for cell phone service in the near future, be sure to take care of these matters first—most companies will raise red flags if they don’t see any activity in your file over a 12-month period.
Unfortunately, there are people who will try to use your information for their own gain, then sell it on the black market. Whether you’re a victim of identity theft or just have negative information on your credit report that is preventing you from getting credit cards or loans, there are steps you can take to clean up your credit report. Credit repair services can help you file disputes with all three bureaus and navigate through any hiccups along the way. The Fair Credit Reporting Act allows consumers to dispute fraudulent data within 60 days of being notified by a company about an error in their credit report. The law also requires that companies respond to these disputes within 30 days. If your dispute isn’t resolved after 45 days, get a second opinion from another credit bureau.