3 Steps to Repairing Your Own Credit

With a little patience and effort, you can repair your credit without paying for the assistance of a credit repair company.

Once you get back on your feet after a financial disaster, you eventually will reach the last hurdle: the credit repair process.

Rebuilding your credit is a necessary process, if somewhat intimidating. Many people put the task in the hands of a professional.

But if you decide to engage a credit repair company, be very careful. There are many bad actors in the business.

Some so-called credit repair companies make inflated promises, such as flatly stating they can erase any negative marks that exist and raise your score in a flash.

Both are false promises. The Federal Trade Commission says it’s against the law for credit repair companies “to lie about what they can do for you, and to charge you before they’ve performed their services.” (To further protect yourself, become familiar with the Credit Repair Organizations Act.)

The FTC adds:

No one can legally remove accurate and timely negative information from a credit report. You can ask for an investigation — at no charge to you — of information in your file that you dispute as inaccurate or incomplete. Some people hire a company to investigate for them, but anything a credit repair company can do legally, you can do for yourself at little or no cost.

If you choose to go it alone, here are the steps you can take to repair your bad credit for free:

Step 1: Access free copies of your credit reports

Visit AnnualCreditReport.com to get a free copy of your credit report from each of the three credit reporting agencies, then thoroughly scrutinize the information in the reports for errors, omissions and fraudulent accounts.

Also, be on the lookout for negative marks that should have dropped off your report because they’re more than seven to 10 years old. Most bad items drop off in seven years.

If you already have received your three free credit reports for the year through AnnualCreditReport.com, you still may be entitled to more recent free copies. According to the Federal Trade Commission, this is true if:

  • You are denied credit, insurance or employment, or offered unfavorable rates because of the content of your credit profile. You have to ask for the free report within 60 days.
  • You are not working, and you plan to begin a job search within 60 days.
  • You receive welfare benefits.
  • Inaccuracies exist on your report because of fraud, including identity theft.

Step 2: Fix errors

To file a formal dispute of an error in a credit report, notify the credit reporting agency online or by letter. Once you have done so, it will contact the other credit reporting agencies. If you decide to use a letter, it should include:

  • Your name and address.
  • The items in dispute.
  • Your argument and any supporting facts to support your claim.
  • A formal request for the resolution of the issue.

The FTC provides a sample letter here.

When sending information to a credit reporting agency, include a copy of your credit report that clearly identifies the item in question. Also send copies of documentation that supports your claim the information is wrong. Remember to send copies rather than your originals.

Send the package via certified mail with a return receipt requested to ensure that it arrives at its intended destination.

Upon receipt, the credit reporting agency must investigate and communicate its decision within 30 days. Should it reject your request, you can ask that a note detailing your argument be added to your credit file.

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