Credit Management

How to Repair Your Credit

Many people are intimidated at the thought of doing credit repair themselves. It’s not as hard as you think. Consolidated Credit Counseling Services has created this credit repair guide to help you with repairing your credit.

Step #1: Get Your Credit Report

The first step in credit repair is to understand what’s on your credit report. There are three major credit reporting agencies: Equifax, Experian and TransUnion. Each of these credit bureaus is separate, and they don’t share information with each other, so it’s a good idea to order a credit report from each one.

Equifax
Equifax Consumer Information Services, Inc.
P.O. Box. 74021
Atlanta, GA 30374
Web site: www.equifax.com

Experian (formerly TRW)
National Consumer Assistance Center
P.O. Box 2002
Allen, TX 75013
1-888-397-3742
Web site: www.experian.com

TransUnion LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
1-800-888-4213
Web site: www.tuc.com

As you review your credit report, look for the following potential credit problems and note them on the Credit Report Problems worksheet.

• Mistakes in personal information, including name (and variations), Social Security Numbers or addresses. (Don’t be too concerned if there are slight variations in previous addresses, or if your employment information is outdated. Employment information is not considered reliable on credit reports and a past address that’s close shouldn’t cause credit problems.)

• Mistakes in account listings. Look for late payments that aren’t correct, outdated balances, duplicate listings of the same account, or other credit mistakes.

• Negative items including bankruptcies, judgments, liens, collection accounts or late payments. We’ll discuss how long these can be reported shortly.

• Inquiries from companies you don’t recognize. When a company reviews your credit report, it creates an inquiry. While they may be legitimate, inquiries into your report from companies you don’t know can sometimes indicate fraud.

If you don’t understand something on your report, ask!

The credit reporting agency is required to provide a toll-free number and people who can explain to you anything you don’t understand on your credit report. Take advantage of this if you need it. If you still don’t get a clear answer when you call, ask for a supervisor or call back later.

Worksheet: Credit Report Problems

Use this worksheet to list any problem items you find on your credit report. These may include credit mistakes or negative items.

Step #2: Understand how long information can be reported on your credit report

The first thing most people with bad credit want to know is, “how long can this information haunt me?” Under the federal Fair Credit Reporting Act, credit reporting agencies are not allowed to report any information that is too old, incomplete, or wrong. While positive or neutral information can be reported indefinitely, negative information can only be reported for the following length of time:

Bankruptcy Filings: Ten years from date filed, not discharged. The three major credit bureaus, and many smaller ones, have agreed voluntarily to remove Chapter 13 bankruptcies -- a bankruptcy where debts are paid back over several years -- seven years from the date of filing. If that doesn’t happen automatically, you’ll have to ask.

Civil suits, civil judgments, records of arrest: No longer than seven years from the date of entry, or the current governing statute of limitations, whichever is longer.

Paid tax liens: Seven years from the date satisfied (paid). Unpaid tax liens: Indefinite until the lien is paid (see above).

Collection or charge-off accounts: Seven years unless a US Government insured or guaranteed student loan, or National Direct Student Loan (NDSL). If those types of student loans are in default and you bring them current for an entire year, your previous late payments will be deleted.

Any other adverse information, (including late payments) stays on your credit report for seven years. Adverse information is any data that may cause an unfavorable action result for the consumer, for example, being turned down for credit, employment or insurance; or being charged a higher rate than applied for in the case of credit or insurance.

When does the 7-year period start?

If you have collection or charged off accounts listed on your credit report, you’ll want to read this section carefully! It may be confusing at first, but because mistakes are often made, you’ll want to make sure you understand it.

For collection or charged-off accounts, the 7-year clock starts ticking 6 months from the date you first fell behind leading up to the collection or charge-off. It does not start when the account was placed for collection or to the date of last activity.

For example…
Let’s say your credit card payment was due on June 1, 2005. You lost your job and couldn’t make your required payments. In November of 2005, the issuer charged off your account (wrote it off as a bad debt). In January 2007, it was placed with a collection agency. By law, the collection agency is supposed to tell the credit bureau when it first reports the collection account that the original date of delinquency was June 2005 and that should start the 7-year reporting period.

Warning: Beware of debt collection agencies that tell you they have ways of reporting the collection account “forever” to the credit bureaus if you don’t pay. That’s simply not true. You can repair any credit mistakes or inaccuracies on your credit report.

Worksheet: How Long Can Information Be Reported?

Use this worksheet to list any problem items you find on your credit report. These may include mistakes or negative items.