Understanding How to Dispute Bad Credit

Federal law outlines your rights as a consumer to dispute bad credit. These consumer protection laws give you the right to dispute any inaccurate or out-of-date information within your credit file. What’s more, the burden of proof is generally on the creditor to show that the disputed information is accurate.

You can have negative information removed from your credit report if the creditor does not report the correct information – errors in address, name, account numbers and even the amount you owe are not uncommon. This is one of the reasons why it’s so important to keep track of your credit file as errors can severely impact your ability to qualify for the kinds of credit you deserve.

While the steps look simple, if you have more than one or two items to dispute, it’s easy to lose track of what’s been filed where. Keeping track of your correspondence when you dispute bad credit is highly important – your creditors are required to respond to your disputes within 30 days. The credit bureaus are required to remove any disputed item(s) from your credit report while the investigation is ongoing.

If your creditors fail to respond in the timeframe provided by law, then the negative item must be removed from your credit report, regardless of whether or not it is correct.

When to Dispute Bad Credit

Knowing when to dispute bad credit can help to save you some time and frustration. In general, it’s best to dispute an error as soon as you see it. Waiting around only increases the time that negative items have to lower your credit scores and damage your chances to qualify for new credit.

Additionally, more weight is given to recent negative items versus older items, so if you can dispute bad credit sooner, you will see a greater lift in your credit scores once the item is removed.

However, in some instances it can make sense to wait. For example, if you have a debt that is near the reporting limit, i.e. 7 years old, then you can safely wait until the credit reporting limit has passed in order to dispute the negative item and be sure it will be removed.

This is particularly useful where you may not have proper documentation, but you are certain of the error. Once the debt is past the reporting limit, you can have it removed for that reason alone, without any backup documentation.

Professional Help to Dispute Bad Credit

While some people prefer to go it alone when they dispute bad credit on their credit reports, others prefer to turn to a professional for advice. Both methods have their places, and it is entirely possible to dispute your bad debt on your own.

However, hiring a credit repair specialist can have many benefits, including:

• Ongoing support for multiple credit issues – get help with organization, verification and tracking for all of your dispute letters and other notices
• Professional intervention with the credit bureaus – get help with follow-up letters, official correspondence and responding to requests for more information from the credit bureaus
• Professional intervention with creditors – a professional credit repair agency will respond on your behalf to any requests for information, or refusals to change inaccurate information from your creditors or the collection agencies as a part of the credit repair process
• Credit monitoring – some credit repair companies will also monitor your credit file for key changes that could impact your scores, so that you can dispute inaccurate information faster and minimize potential damage
• Peace of mind – with a professional supporting you, you don’t have to worry about the day-to-day tasks of repairing your credit

Whether you decide on professional help to dispute bad credit items on your credit report or not, the important thing is to take that first step. Go over your credit report, start disputing the incorrect items, and see your credit scores improve.

It is your right as a consumer to dispute negative items that are inaccurate and you owe it to yourself and your financial freedom to have the very best credit scores possible.

1. Keep a Spending Journal. Often, it’s not the big purchases that can cause problems, but instead, several small purchases that add up. Fast food, movie rentals, and other little conveniences we take for granted can quickly add up. By keeping a diary of exactly what you spend on a daily basis, you can track precisely where your money goes when you make these ‘unseen’ purchases. Once you understand your own spending habits, you’ll be better prepared to stick to your financial goals when temptation arises.

2. Create a Budget. This goes hand-in-hand with your spending journal. In order to control your spending, you have to set reasonable limits. Look at your bills and see where you can cut back, as well as areas that you may need to spend more in order to reach your goals – putting away more money into your health savings account may be useful if you are planning to have a major procedure, and want to avoid maxing out a credit card, for instance.

3. Prioritize. When you are setting goals for improving your credit, prioritize what’s most important. Getting current on everything at once may not be possible, but you can decide to get current and stay current on those cards that are charging the highest fees, for example. Once you’ve met one goal, move on to the next – credit repair is a dynamic process, and as long as you are willing to move forward, you will see positive results.

4. Make a Wish List. Don’t forget to reward yourself (within reason) as your credit scores improve. Try to think of ways to treat yourself that won’t put you back into debt. Save up for a well-deserved vacation, or treat yourself to dinner and a movie twice a month. The trick here is to find something that will motivate you, without breaking the bank.

5. Automate Your Bill Pay. If you find that you are often charged late-fees because you forget the payment due date, why not pay automatically through your bank? Most banks now offer online bill pay as well, so avoiding late fees and the damage to your credit scores can be as simple as a click of the mouse.

6. Keep Track of Your Progress. Don’t forget to check your credit report and scores to gauge your progress after several months. Everyone gets one credit report per year for free – and people in some states get 2, so check your local regulations. Make sure that companies are reporting your timely payments accurately, and don’t forget that you can dispute inaccurate information on your report. If you need help with the process, work with a reputable credit repair agency to get the job done.

The ‘trick’ to credit repair is in knowing that it is an ongoing process. As you move towards your financial goals, always be willing to incorporate ways that will make it easier for you to succeed.

Most unlawful credit repair companies have been taken down by the FTC; however there are still some in operation. If you are would like to repair your credit, it’s important that you don’t get lured in by illegal tactics and fraudulent companies. If you follow illegal advice and commit fraud, you may be subject to prosecution. Below is a list of illegal credit repair techniques to look out for:

Illegal Credit Repair Tactics

• Changing your social security number or starting a “new” credit file. Some companies will offer to teach you how to start a new credit file by applying for an Employer Identification Number to use instead of your Social Security number. Avoid and report such companies.

• Companies that ask you to pay for credit repair services before they provide any services.

• Companies that don’t tell you your legal rights and what you can do by yourself for free.

• Remember, it is also illegal to try to obtain credit by lying or making false statements on an application.

Now that you know what to avoid, let’s look at some of the things you can do to repair your credit.

Legal Credit Repair Tactics

• Dispute erroneous information on your credit report. Not only is it legal, it’s your federal right. The Fair Credit Reporting Act gives you the right to dispute items on your credit reports directly with the credit bureaus. The burden of proof is on the credit bureaus. If they can’t verify that information is correct, then it must be deleted.

• Debt validation is a tactic that’s used when dealing with collection accounts. The FDCPA gives you the right to demand that collection agencies validate any debts that they are trying to collect on.

• Negotiating directly with creditors is a tactic that is sometimes used to ask the creditors politely to remove the negative items from your credit report.

If you would like to have professionals repair your credit, check out the top legal credit repair services. If you prefer to do-it-yourself, the credit repair forums are a great place to start!

Tip #1: Know what you’re dealing with. If you want to restore your credit to a given level, you have to know where to start from. You are entitled to a free copy of your credit report once every year from each of the 3 major credit reporting agencies, but if you’re looking to do some credit repair, you should purchase them from each credit bureau separately.

Tip #2: Once you know what you are dealing with, you can begin your credit repair efforts. Do-it-yourself credit repair is all about having negative items removed or updated to a positive account. Even if the accounts are “really yours”, they must be removed if they are not verified within a reasonable amount of time – normally 30 to 45 days.

It’s important to go through your report and dispute negative items in the correct order. Your first letter should be disputing any contact information that is not current. In your second letter, you can start disputing the negative accounts. It’s not wise to dispute more than 5 accounts at the same time.

It’s up to the credit reporting agency to investigate the information at this point. They do so by contacting the originator of the negative complaint. If that individual or organization does not respond and verify the item in time, the law states that it is to be immediately stricken from your report. Additionally, there is a statute of limitations on almost all credit report items. They are automatically to fall off after a given time period. Check for them and inform the CRAs of any discrepancies.

Tip #3: You need to keep good records. You want to always be a thorn in the side of these reporting agencies. Clerical errors, human laziness, company mergers and bad record keeping are but a few of the reasons why your negative items may not be verified in a timely fashion. This is what you want to happen! Also, send in your dispute forms at the busiest times of the year like major holidays and the peak of tax season.

Tip #4: After you send in the dispute letters, go about your business and make sure that you are not creating any more negative issues concerning your credit. Make your payments on time – every time. After 30 days, the credit bureaus should have sent you another copy of your credit report. They don’t always do this. If not, you may need to call them or write them and request it. Go over it again and check to see if every dispute that you filed has either been removed or verified. The statistics say that around 40% will have disappeared. That’s great! Sometimes, it’s a lot higher.

Do-it-yourself credit repair is a simplistic endeavor. It only requires organization and a plan. With some attention to detail and patience, your do-it-yourself credit repair efforts will save you thousands of dollars as compared to hiring the services to be done for you. Your credit rating will be enhanced and your life will begin to flow smoother. When it comes to repairing your credit, do it yourself!

To repair your bad credit, you must find a starting point. The best way to do that is to obtain a copy of your credit reports from the 3 major credit reporting agencies, also known as credit bureaus. You will also need to know what your credit scores are.

Once you have your reports, you’ll want to make sure all the information is accurate. There are mistakes in about 80% of all credit reports. If you find any accounts that you are unfamiliar with or are reporting incorrectly you should dispute them with the credit bureaus. Creditors are notorious for reporting erroneous information on your credit reports. So, even if it’s just a small error; that gives you the right to dispute it. It’s important to note that whether the account is actually yours or not makes no difference on their responsibility to verify it. If the account can’t be verified, it must be deleted.

The credit bureaus get thousands of disputes each day and many times they don’t do a very careful job of investigating items you’ve disputed. So, it may take a few rounds of letters until the credit bureaus remove the negative information. Be patient and wait at least 30-35 days before sending another round. Do not give up. It may seem like just one or two small errors that they are falsely reporting about you – no big deal, right? Wrong! Just one error can cause your credit scores to suffer immensely and could end up costing you thousands of dollars. This is very serious business. It’s extremely important to make sure everything on your credit reports is being reported correctly.

Another thing you should do is pay off the most recent past due accounts. Be careful making payments on older charged off accounts as paying them could possibly bring your scores down even further which means they can report the negative account for 7 more years. You will also want to try to get an agreement with the creditor to update it to “paid as agreed” or remove the account BEFORE you pay it. It’s much harder to get it updated or removed after you pay it because you don’t have much leverage.

Another important part of raising your credit scores is to keep your existing balances below 30-40% of your credit limit. You’ll also want to minimize the number of inquiries you make by not applying for credit unless you absolutely must. Use your inquiries wisely and sparingly, as applying for too much credit in a short amount of time can be very damaging to your credit scores.

Don’t have time to repair your credit? Let the professionals at Lexington Law Firm take care of it for you. Call 1-800-220-0084 for a free consultation. They delete all kinds of negative credit including bankruptcies, foreclosures, repossessions, charge offs, judgments, tax liens, collections, and more.

At the same time, you want to always pay your bills on time – that should be obvious. Late payments play a major role in driving down your credit scores. You will also want to keep your debt-to-credit-limit (or available credit) ratio as low as possible. Never let it get above 40%. If you don’t have many positive accounts reporting, you may want to open some new accounts to raise your debt to available. Try to get an unsecured credit card from your local credit union or a secured card from a legitimate site online.

Don’t close unused accounts, especially if they are old and reporting positive, because zero balances can help your score. Also, don’t open several new accounts in a short period, especially if your credit history is less than three years old. Too many inquiries in a short period of time can really be hurtful to your credit scores. Apply for credit wisely.

It should be mentioned though, that pulling your own credit does not harm your scores. In fact, many people think it’s wise to use a monthly credit monitoring service online to monitor your progress and make sure there are no unauthorized inquiries or new accounts showing up on your reports.

As mentioned, disputing negative accounts on your credit reports is an excellent way to raise your credit scores. All negative accounts on your credit report should be disputed to make sure they are accurate. If they are not, they must be removed. You don’t have to be dishonest when disputing accounts; the burden of proof is on the credit bureaus and the lenders. If you know that an account is yours, do not dispute it as “not mine”.

It’s their obligation by law to verify the account and show proof that every little thing they are reporting is 100% accurate. If it’s an old account and the lender no longer has the records to verify an account, guess what? It must be removed. Just remember to always be careful and honest when disputing. Unintended consequences happen quite frequently with credit bureaus. They know how to play the game and they are NOT happy about having to verify your accounts, so be smart about it or you will find yourself with even worse credit.