Our credit repair bible is designed for everyone seeking professional help or attempting to engage in do-it-yourself credit repair. It is a sizable source of information that will equip you with tools to not only help you understand the ins and outs of credit but also provide insights about your rights as a consumer.
While this guide is created with the intention to mentor you through credit repair, it would not be fair to those that simply have no time or patience to tend to their credit affairs by themselves.
The same can be said for getting your nails done or changing the oil in your car without hiring professionals that can probably do it better since they have been trained to do so—or possibly getting legal advice since you can represent yourself without all the unnecessary attorney fees. That is how reputable credit repair companies work despite you having all the rights as a consumer to do the same without our help.
We micromanage every aspect of your case, working diligently with various experts to provide the best possible results on your path to a perfect credit score.
Cleaning up your credit is not only about having better financial opportunities, although that should be our main concern. As superficial as it sounds, having a good credit score and decent credit report will finally allow you to apply for credit cards or financing without your heart skipping a beat while you wait for the decision. Let’s be honest – being rejected from receiving a loan or credit card can be quite intimidating and embarrassing. .
If you won’t, no one will. In fact, it is often not in financial institutions’ best interest to give out loans on the best of terms since they might be losing money due to lower interest rates and other factors. Imagine Ben, a twenty-something student who desperately desires a brand-new car. He steps into one of those luxurious dealerships in search of his dream vehicle only to find out his credit score is not sufficient to qualify for low-interest rates. He is happily offered financing solutions by a pushy salesman who makes it sound like a dream come true, but the loan terms are less than perfect. No one bothers to explain to him what the agreement means, and Ben is too excited to acknowledge the fine print at the very bottom of the page. He signs and drives away in his new ride. Sound familiar? What awaits Ben is high installment payments with ridiculous interest rates that not only dig a massive hole in his wallet but also make him pay almost double the amount of the car’s original value.
The Fair Credit Reporting Act (FCRA) ensures that consumers have equal rights when it comes to their credit affairs. Here is a summary of how FCRA protects consumers:
Anytime an institution denies your credit application based on obtaining your credit information, such as credit reports, the FCRA requires whoever used your file against you to keep you informed. The same applies to insurance or employment rejection, or other adverse action based on your credit information. Furthermore, you must be provided with the name, address, and phone number of the reporting agency.
As part of the FCRA’s accuracy promise in your credit file, you are entitled to obtain free credit reports once a year from the three major nationwide credit bureaus – Equifax, TransUnion, and Experian. In addition, you may qualify for a free file disclosure in the following circumstances:
Otherwise, you can always gain access to your credit file with a fee by providing your identifying information, such as your date of birth and Social Security number.
You have the right to obtain your credit score, a numerical representation of your overall creditworthiness. There are several ways to go about it as you also have more than one credit score. These are calculated entirely based on the information within your file – the data your past and present creditors feed the credit reporting agencies. You may access your credit score directly from the consumer reporting agencies that ultimately create the three digits, your bank, or credit card companies.
FCRA ensures that you can dispute inaccurate or incomplete information from your credit file that will open an investigation into your report. If the information proves to be incorrect or unverifiable, the consumer reporting agency has 30 days to delete or possibly correct the information. In addition, if you do not receive any updates within 30 days regarding the outcome of the investigation, you have a right to have the reported inaccuracy removed.
A time limit exists for reporting negative information by consumer reporting agencies. Outdated entries, such as late payments, should not be reported if they are more than seven years old, and any bankruptcies 10 years or older should also be considered “expired.”
Although certain parties can gain access to your credit file, it is limited to creditors, insurance companies, potential or existing employers, and landlords. FCRA ensures that only valid requests get the permissible information about your credit. Additionally, for employment or rental purposes, you must provide your consent before they can access your credit report.
The derogatory information fed to the credit bureaus can be legally removed. Such entries include late payments, collections, or hard inquiries. This is where the credit repair journey truly begins – with the reassurance that your credit file can be cleaned up. If removing negative credit information was not possible, many professions would be out of a job, including bankers, brokers, or reputable credit repair companies. Here’s why removing derogatory entries is legal:
The major credit bureaus that monopolized the credit industry are not government agencies, as most consumers assume. Experian, Equifax, and TransUnion are private companies collecting data about your creditworthiness that essentially craft the dreadful credit report.
Because they are privately owned, these credit-reporting enterprises follow their own protocol when compiling your credit file, which includes utilizing various sources. The credit bureaus gather information about consumers from various institutions, including retailers, banks, loan companies, and other creditors – all of which are known as data furnishers. Because credit reporting is not mandatory, companies follow different paths when furnishing your credit information to credit bureaus. Your lenders might choose to report late payments only and do so at various times and frequencies. Some may report to all three credit bureaus while others to only one.
Just as furnishing positive information, such as timely payments, to credit bureaus is voluntary, so is reporting late payments.
Ultimately, your creditor owns your payment history—not the bureaus. They are not forced to disclose any late payments or other information. That is between the loanee and the creditor.
Just as you may miss a payment or take out a loan you have trouble paying, credit bureaus also make mistakes regarding your credit. A company may accidentally report information incorrectly, or the bureau may have made a mistake on its end.
If this ends up happening, make sure you send an official letter to the bureau or bureaus that are listing an error. Make sure to list the inaccuracies in the letter, along with your personal information. Be detailed about the mistakes and include any documents that show where the error occurred and how. Consider printing your credit report and circling the problem areas. Do the same for any documentation you have to dispute the mistakes made by the bureau or the lender.
The bureau or bureaus will look over the information you sent and make a determination within 30 days. If the dispute isn’t properly resolved, ask that the dispute be included in your files and future reports.
If the issue is resolved, make sure the bureau updates the information in a reasonable timeframe. They should give you an estimate for how long this will be.
If your creditor makes a mistake, contact them to dispute this mistake. They may be able to correct the issue. If they don’t, you can reach out to the credit bureaus about the mistake.
There are a few ways that a credit bureau calculates your credit. These include:
A mathematical formula called a “scoring model” is used to calculate all of this information and create a credit score.
There are three major credit bureaus that are reported to (which we discussed earlier). These are Experian, TransUnion, and Equifax. In order to learn more about your loan history, creditors report information to them. These creditors may include:
While some companies may feed information to the three major credit bureaus directly, others don’t. Instead, they hire debt collectors that may, in turn, report to one or more credit bureaus.
As you would probably guess, having a poor credit score isn’t going to help with your insurance premium. Better credit is usually going to get you better rates on your insurance. Actually, having poor credit may even double your rates for certain types of insurance!
With that said, if you get your health insurance through your employer, your score probably won’t matter. Your credit score mainly affects how much you pay if you buy health insurance out of pocket.
Buying a car is one of the most common reasons people want to build their credit. On top of that, owning a car and making on time payments can do a lot to boost your credit score. It’s a win-win! With that said, there are some things you’ll want to consider when it comes to buying a car on credit…
If you are able to build your credit before buying a car, you are better off. The last thing you want is to get locked into a loan with a high interest rate. Below are some rough interest rates, along with the credit scores that match them (estimated):
As you can see, having poor credit is going to lead to much higher loan interest. If you are able to improve your credit before buying a car, you’ll be better off than buying it with poor credit and making payments.
If you absolutely need a car, make sure you make your payments on time. You also may be able to negotiate the interest rates with a car dealer. See if you can negotiate a loan with better terms before you sign off.
Keep in mind that, as your credit score improves, the amount a lender will be willing to lend you will also go up. With that said, don’t get in over your head. If a lender is willing to give you an extra $10,000 more than you were expecting, this isn’t a free pass to go crazy and buy a fancier car. Stick within your budget and your means when purchasing your car.
If you start missing car payments, your credit is going to suffer. Don’t get overzealous and buy a car you like but can’t really afford.
One of the most important things when it comes to an auto loan is your FICO score. This score is made up of different parts of your credit history, which includes unpaid debts, how many open accounts you have, how long your accounts have been open, the percentage of credit you’ve used, and more.
Your FICO score is based off of information from your TransUnion, Equifax, and Experian scores. It’s good to check your FICO score before you buy a car, since it is likely going to be the determining factor when it comes to your loan.
It may seem daunting to request your credit reports, but it’s actually a lot simpler and more straightforward than you may think.
You can request your credit score from the three major bureaus by sending a letter to:
For more information, visit the FTC (Federal Trade Commission)
You are also able to get a ballpark estimate from companies like Credit Karma. Some banks will even provide you with a credit update if you sign up for updates. Again, for the most accurate information possible, make sure you use the form above.
In order to dispute negative items with the major credit bureaus, you’ll need to take a few steps. Below is the process of disputing with the credit bureaus:
The first thing you’ll need to do is file a dispute with the credit bureau or bureaus that are affected. In order to do this, write a letter of dispute that lets them know the information is inaccurate. Because of the Fair Credit Reporting Act (FRCA), they are legally obligated to investigate the claim and get back to you in 30 days. It’s free to file a dispute.
You can choose to file your dispute by mail or through the website of the bureau. Make sure you have documentation to prove your claim.
Once you’ve prepared your letter, mail it. Make sure it is sent by way of certified mail and include a return address. This allows you to receive a signature showing the bureau received the letter.
Make sure you keep a copy of all of the documents you sent, your letter, and the certified mail signature.
The bureau will get back to you within 30 days. At that point, they’ll let you know the results and when you can expect an update to your score. Keep in mind a dispute is not a guarantee of repair. They may decide your dispute is invalid.
Other ways to dispute inaccuracies with credit bureaus include hiring a credit repair service and working with a credit counseling agency.
A credit repair service can dispute the inaccuracies for you and check your report for errors. Nonprofit credit counseling agencies also can help provide you with assistance for a low fee or even no charge if grants are available.
For more info on nonprofit credit counseling agencies, visit the NFCC website
Before reaching out to the credit bureaus, you’ll want to consider reaching out to the creditor and reporting businesses that are affecting your credit.
First, reach out to the creditor. Write a simple letter or email and explain the situation. Be polite in the letter, but make sure they know you mean business. They should be aware that if they don’t address the issue, you will escalate it.
You can also file a dispute with the reporting business. This may include banks or credit card issuers. By law, they have to look into the issue and get back to you. This may help you to avoid getting in touch with the credit bureaus yourself.
When you are disputing, make sure the negative items are addressed with all three bureaus if all three are affected.
If the creditor doesn’t address the issue, make sure you file a complaint with the Federal Trade Commission or the CFPB (depending on the size of the creditor).
Whenever you file a dispute, verify that the claim has been filed and is being addressed. If you can, get it in writing. The more documentation you have, the better. You may need to prove you filed the dispute if you end up reporting an issue.
If you end up having debt collectors reach out to you about debt, make sure you ask for a debt validation letter. They are required by law to provide you with certain information, including:
Make sure the debt collector sends you the debt in writing so you can see their claims and dispute them if needed. They are required to send you this letter in writing within 5 days. From there, you can dispute your debt.
There are a few factors that determine how fast your credit score can go up and by how much. If you dispute an error (as we just discussed), you may see an increase in as little as 30 to 90 days from when the issue was resolved. If, on the other hand, you are trying to rebuild your credit, the process can take significantly longer.
With that said, there are some ways that you can raise your credit score quickly. Let’s take a look at how you can raise your credit score as quickly as possible…
There is a statute of limitation on debt. This may be anywhere from 3-10 years. Once this period has passed, a creditor can’t sue for any unpaid debt. When an account is re-aged, though, the statute of limitation starts over. This can happen when a borrower makes a payment on old debt, or if they discuss the old debt with a creditor. Re-aging can also occur when a debt is bought and sold by debt collectors. Once the debt is acknowledged, the borrower may be back on the hook to pay it.
With that said, re-aging can be illegal for a creditor to do. If debt collectors report a debt to the bureaus after purchase and re-age the debt, this is illegal.
Here’s something to keep in mind—even though your credit score will improve when a debt falls off (usually seven years), you still owe the debt for now. This will continue to affect your score for the time being.
If you want to boost your credit quickly, consider paying off your old debt.
If you have lingering balances, make sure they get paid off. Your credit utilization ratio is important for your credit score (we’ll get to that in a moment). Paying your lingering debt will help to open up the amount of credit you have available.
Consider starting with smaller debts, like credit card bills. Focus on getting a debt paid down so you can open up that credit and stop paying fees. This is a way to get started with paying your debt and increasing your credit limit without stressing out too much about the size of the debt.
Sometimes paying some debt, even small lingering debt, can help you to get the ball rolling.
What you may not realize is that you only have so much credit available. People often don’t consider that credit is a finite resource. Your credit utilization ratio is how much credit you owe, compared to what you have left.
As an example, if you have a $10,000 credit limit and you’ve burned through $8,000, you have used 80% of your total credit. This negatively affects your credit score. This isn’t by a small amount, either. 30% of your credit score is built around this ratio. So, you need to make sure you aren’t taking out all of your credit.
In order to continue to use credit cards and boost your credit, you need to make sure you are regularly paying down your debt. This may mean bi-weekly, or even weekly. Leave as much open credit as you can to improve your credit score moving forward.
No part of this site may be copied, distributed or reproduced without prior written permission. The services of Pyramid Credit Repair and its affiliates may not be available in all states. Pyramid Credit Repair, assists consumers with credit reports that are inaccurate, misleading, unverifiable, untimely, incomplete or that otherwise contain incorrect information. All testimonials are from actual clients. Individual results may vary.