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Can You Really Repair Your Credit Score?

By Ruth Racey
Published: Tuesday, November 24th, 2009

An excellent credit score does not have to be an elusive dream.  Even those who suffer from bad credit can take action to repair their credit score and work their way up towards good credit.  If you are in need of credit repair, here are some steps you can do to recover from bad credit:

Obtain a copy of your report from any of the three credit reporting agencies in the US-Experian, TransUnion and Equifax. These agencies monitor and calculate individual credit reports of consumers across the United States.

Look for possible errors in the credit report.  These mistakes could be pulling down your score.  If you notice errors, send a letter to the bureau where you obtained your report and let them know about your issues.  The credit agency that issued the report will conduct an investigation.  After 30 days, you should receive an updated copy of the report with the items in dispute now corrected.

What if the reporting agency found that your dispute was invalid?  The best thing to do is contact the creditor involved about the matter.  If these were past due debts, you may try to reach a negotiation with your creditor.  Ask for adjustments in repayment terms so you can work in paying off debts at a more reasonable phase.

After negotiating with creditors, be sure that you can stay true to your promises.  If you have agreed to submit payment on a certain date, do your best to submit on or before the scheduled day of payment.  In case of emergencies and you think you will not be able to submit on schedule, contact your creditor immediately to inform them of your situation.  It is very important not to miss a single payment if you want to improve your credit score.  If you already have bad credit, even a single delay can affect your final score. 

Another way to improve your score is by reducing the credit-to-debt ratio.  One criterion in calculating the FICO score is based on your credit-to-debt ratio.  Ideally, you will want to maintain at least 50% of the credit limit free from charges.  If you own a credit card, try and keep your monthly charges low. Avoid using up your limit by paying off your charges in full each month instead of carrying a balance.

While you are in the process of rebuilding bad credit, you may want to stay away from sending applications to different lending companies or card issuers.  This may not be the best time to apply for a new loan or card. Continue submitting your payments on time and check your credit report after a few months to review your progress.

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