Repairing Your Own Credit

In researching credit repair – e.g. how one can go about fixing their own credit score, we came across some very interesting facts.  A lot of people, even very learned people, are unaware that banks are not lending because they are just not seeing credit-worthy borrowers. 

Banks are in the lending business and thus want to lend money.  But, they also have rules and policies that must be met; rules that advert borrower risks – most related to past credit histories.

Now, based on this lack of credit-worthy borrowers there are a plethora of companies cropping up that tout they can fix your credit score or credit history quickly and easily if you just merely pay them an up front fee.

In researching this market, one of the first sites we came across was from the Federal Trade Commission’s (FTC) website.  In the first few paragraphs, we can across the following statements which made us take notice:

“You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:

“Credit problems? No problem!”

“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

“We can erase your bad credit — 100% guaranteed.”

“Create a new credit identity — legally.”

The Federal Trade Commission further says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for credit-worthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.

There use to be a time in this country where you could get a deal done with a handshake.  No more.  Your credit score is the new handshake.  And, if you want the deal, your handshake cannot be limp, weak or sweaty – which means your credit needs to be strong and confident.

In business, not only do you need a strong credit score to obtain the capital needed to start, run and grow your business but many customers (especially large national companies or government entities) will pull your credit histories before doing business with you.  Further, many vendors or suppliers will pull your credit reports before sending the materials you need to do business.  One of the greatest financing vehicles a small business can utilize is trade credit.  You receive the materials you need for your business from your vendors and supplier, but with trade credit, you don’t have to pay for those goods until you have had the time to add value and sell those goods and service to your customers.  Thus, you are not out the expense of these goods until you have the revenue from your customers to cover their costs.

The bottom line is to fix your own credit – you would not believe the number of doors that will open to you and your business if you can create and maintain a high personal credit score.  But, keep in mind it takes work – it will not be easy, it will not be fast and the only guarantee is the amount of work you put into it.  But, the more you can improve your own credit, the better off you and your business will be in the long-run.

The following are some advice uncovered in our research:

1) Review your credit report semi-annually at the very least. Get a copy of your credit report history from each of the three major bureaus and review them for errors, outdated or bad information and open or negative accounts that aren’t yours. The three credit bureaus will provide information about how to dispute these items.  In most states, you are allowed a free report once a year.

2) In writing or disputing errors to the three bureaus, ask for them to investigate all of your negative accounts and give them individual reasons for your dispute. Don’t lie about the reason for your dispute or if you actually own the account. Just simply state that you don’t have any record of this account or you don’t believe this account to be yours.  By law, the three bureaus must investigate these disputes – but, it will take time for them to do so.

3) Once your written dispute is received by the three bureaus, under Federal Law these organizations must investigate this information with the creditor on record for that or those accounts. If the creditor cannot or does not provide proof the account belongs to you, the three credit agencies must remove the item from your report. Once the negative item is removed, your scores should start to increase and you are on your way of fixing your own credit.

Just make sure that you pull all three credit bureau reports and dispute items to only the ones that are showing the negative information. Not all bureaus will have the same information.

While the recession seems to be turning – the recovery will take some time before any real impacts are felt.  This gives you ample time to work on fixing your handshake (your credit history).  Thus, as banks begin to open their vaults again, you have a much better chance of getting the loan you need – personally or for your business.

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