Credit Repair Mistakes

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One the most important scores in anyone’s life is their credit score. Many people don’t realize it but this score is more important to creditors, insurance companies, employers and businesses when deciding whether to enter into a credit contract with someone than their bank account balance. This score is crucial when applying for life or health insurance, leasing an apartment, house or automobile or getting and paying for loans and credit cards.

Credit Scores are Sliding Downhill

In the recent past getting credit has been much easier than managing it. Therefore, a larger number of people are finding themselves in trouble with their credit report and score.  This is evidenced by the growing numbers of bankruptcies and foreclosures which are piling up at the court house higher and higher each year.  This prompts some distressed people with damaged credit to try and actively repair their credit. However, people trying to repair and improve their credit should avoid these mistakes.

Ignoring Your Credit Score is Your First Mistake

The first mistake to avoid is to entirely ignore and not deal with credit reports at all.  This amounts to not having any idea about what is on credit reports or why a credit score is not what it should be to get great credit.  The first step is to request a copy of all three credit reports and scrutinize them thoroughly.  Verify the information on them to assure accuracy and that the information is up to date.  An example of inaccurate information that will have a negative impact on a credit score would be if a credit card balance has been paid off entirely however one or more of your credit reports show the account as still having a balance.

Not Challenging Errors is Your Next Mistake

That next mistake that many people make is not challenging the errors on their credit reports.  At first, it may appear to be an overwhelming job but disputing a charge or any other incorrectly reported item can get done quickly and with relative ease when the procedure is known and followed.

Filing disputes on credit reports must be done in writing and not online or with an e-mail.  The purpose of doing it this way is so that a written hard copy of all correspondence received or sent to the credit bureaus can be archived in a file.  Sending the dispute letters to the correct address and department will make certain that a reply will be received in a timely fashion.  If at all possible, include copies of all documents that prove the disputed item is an error with the correspondence.

Protect Against Identity Theft

The third biggest mistake most people will make is to not protect their extremely valuable credit from today’s fastest growing white collar crime…identity theft.  Reports from the United States Federal Trade Commission indicate that as many as nine million American citizens are victims of identity theft every year.  When your identity is stolen the thief will use your Social Security number and other personal identifying information to apply for and open credit card accounts, auto loans and lines of credit without any intention of paying them off.  This will have an extremely negative affect on your credit report and credit score.  Always be very careful about who you give your identity information to and consider using a daily credit monitoring service to guard against identity thieves.

A more drastic measure but one that does not require ongoing credit monitoring fees is to write to the credit bureaus and request a freeze be placed on your accounts.  The disadvantage of doing this is that you may find it a bit more difficult to apply for new credit but it will guard your identity because the credit bureaus can’t provide your credit information to anyone without your permission.

Keep At It

Lastly, people who try and improve their credit score will often be unrealistic about achieving a quick fix, become discouraged then give up far too early.  The job of repairing a credit score should be viewed more like a marathon rather than a sprint.  A quick fix is generally not achievable.  To see a significant improvement in your credit score count on six months to one year.

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