Repair Your Credit Without Going Into More Debt

roryanne muldrake By roryanne muldrake, 30th Nov 2010 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Money>Debt

Different ways to improve your own credit history, without spending money.

Fix your credit history yourself

Everyone has seen the ads from credit repair companies that promise to wipe out consumers' debt. While the idea of a quick fix is appealing to many consumers, paying someone to fix your credit is not the only option.

Mortgage companies want people to have credit. They want to loan money to people who make payments on their credit cards, on time. They do not want to lend money to people who skip either monthly payments or who do not make payments at all.

They also do not want to lend money to those who have no credit history at all.

Building Credit

You may not own credit cards and pay for everything you buy in cash. If you are renting a home or living in an apartment, you may believe that it would be easy to secure a loan to buy a home for the first time. However, you may well come across problems you may not know about.

For instance, if you are renting a home or living in an apartment and you want to start looking into purchasing your first home, there are steps you can take anywhere from one to two years before you begin house hunting.

First, retain your check stubs, statements on utility bill payments, and rent receipts. Request a detailed statement for anything you pay for on a monthly basis. This is what loan companies call credit lines. You will need these in place of credit card accounts listed on your credit report.

Credit Bureaus

The next step towards securing a home loan is to request your credit report from all three credit bureaus, Equifax, Experian, and TransUnion. Creditors may report different accounts to one credit bureau and not to the others. When you obtain your report, you need look at every item listed on your credit reports, including the sections that include your personal information and employment history.

Many people find errors in every section of their credit report. Pay particular attention to the following sections:

Birth date
Current address
Previous addresses
Years lived at previous addresses
Years worked at current employer
Verify the spelling of names listed.

Many people discover spelling errors on their credit reports. If a credit bureau spells your name wrong, the chances are good there are other errors on your report.

Occasionally, credit bureaus have people living at two residents at one time. This occurs when a creditor sends negative information about an account you had while living at your previous address. There are cases where credit bureaus list previous addresses as General Delivery.

Under the employment section, check the name and address of present and former employers. Credit bureaus make mistakes on everything from the years you worked there, to the correct name and address of the employer. Also, check the dates they list for the years you worked for previous employers.

Consumers may also find that credit bureaus have them living in two places simultaneously. Check the dates as well as the addresses. Credit bureaus often list incorrect dates of birth.

There are potential reasons for these errors. One is that the people recording this information are not as intelligent as when dealing with others' personal information. Another reason may be that they are careless because nothing they list on credit reports affects their personal or financial well-being, so it is not significant to them.

It is imperative that you correct all of this information. Unfortunately, that is not the only action you will need to take.

The rest of your credit report will contain your credit history. If you do not own credit cards, and you currently rent your home, you might see the following items listed:

Public Records

As a tenant, you run the risk of property owners reporting to the credit bureau if you were ever late, even one day late, paying your rent. You may also see reports from electric, gas, and telephone companies if at any time you made late payments on your monthly bills. You may be able to remove these items from your credit report, and in turn, repair your credit rating.

Fixing the Errors

To correct errors on your report concerning personal information, you need to contact the credit bureaus and have them correct the mistakes. Calling them may not be sufficient. You should send a letter with the corrections, to all three credit bureaus, requesting that they change this information on your credit report. Mail this letter certified, with a return receipt request from the post office, so there is no question as to whether or not they received the information. Once you receive notification that the post office delivered your letter to the credit bureaus, call them, and ask for verification.

Once the credit bureaus fix the non-credit items in error, you will have to work on the items listed in the credit history section. If there are errors in dates or amounts of payments, you will need to write letters to the original creditor.

For example, if the electric company sent your account to a collection agency, you should never contact the collection agency. You should contact the electric company. If it is a legitimate account, you can work out a payment with them, provided they agree to remove it from your credit report. If the account listed is incorrect in any way, write them and tell them. It is illegal for a creditor to report false information to credit bureaus. Again, send your request by certified mail and wait until you know they received, before you call to speak to them.

All of this could take as long as a year to accomplish. Once you succeed in cleaning up your credit report, and you have built up credit lines, you will be ready to pursue the dream of owning your first home.

Most importantly, you will have fixed your credit yourself without paying someone else to do it for you.


Credit, Credit Card, Credit Repair, Debt

Meet the author

author avatar roryanne muldrake
published writer; now working at home; currently writing for Helium and Examiner

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author avatar aesoplado
30th Nov 2010 (#)

I just use cash. If don;t don;t have some, I don't buy. :>

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author avatar roryanne muldrake
30th Nov 2010 (#)

That's how I like it. That way, something's paid for and you don't have to worry about paying for it, later.

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author avatar Strovek
2nd Dec 2010 (#)

Good information. Didn't know there is an alternative.

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author avatar roryanne muldrake
4th Dec 2010 (#)

I found out the hard way when we went for a mortgage loan. It took longer but we finally got our first house years ago.

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author avatar Denise O
4th Dec 2010 (#)

Very informative article.
All great tips.
Thank you for sharing.:)

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author avatar roryanne muldrake
4th Dec 2010 (#)

Thanks, Denise.

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