Credit Repair Process – The 3 “Ups”

The process of getting credit repair can be intimidating. The reports can be confusing. The process of addressing each entry can be hard for people to grasp. And, in some cases, there may be a few entries that someone might find embarrassing. But, it can all be put into perspective by dividing the process into a few simple, discrete steps. We like to call them The Three Ups:

Clean Up

During this phase, negative entries are removed. Each of the three credit bureaus has a dispute process in place. Entries that don’t belong on your credit report can show up in error; research shows that two-thirds of credit reports include some sort of mistake. Errors can include showing debts that were already paid, showing duplicate debts, listing debts that are past the age limitations and listing ones that were never yours to begin with. A creditor must verify a debt within 30 days of the dispute. If they can’t, it’s taken off.

Build Up

A lack of negative entries on your credit report is not enough. You also need to show a history of using credit wisely. Your credit repair company can walk you through this process. You build up new credit by opening new credit cards (using secured cards if necessary) and opening installment loans like car loans. It’s good to show a mix of types of credit when you are building up your score. Be careful about opening too many accounts at once. Each hard inquiry temporarily lowers your score. And, if creditors see too many inquiries at once, they can think you are in financial trouble and trying to get money fast. By picking out the types of new credit accounts that will best suit your needs, you can use them to start building up your credit within weeks.

Pay Up

Nobody likes this part, but, the unpaid debts on your credit report that are deemed valid must be paid. This comes after the clean up process because you’ll know what debts are not going away any other way than paying or letting them age enough to fall off your report. The good news is, you will probably not have to pay the full amount on many, if not most, of the unpaid debts on your account. Collection agencies buy old debts for pennies on the dollar. If they manage to collect half the original debt, they are still making a phenomenal profit. Many experts recommend starting with an offer that is as low as one-quarter the original amount. Also, the offer made should be for “pay for deletion.” If that condition is granted, the collection will disappear from your credit report completely.

Repairing your credit takes time. Sometimes the process can seem tedious. But, the effort that goes into it can pay off in the ability to buy a home and enjoy your part of the American dream.