DIY Credit Repair Strategies

Since 1958, FICO has been one of the leaders in the credit scoring industry. These scores range from 300 to 850 with 'good' credit typically starting at 680. VantageScore is another model first created by the three big credit bureaus (TransUnion, Experian, and Equifax) and uses granular data from your credit payment history to tabulate a score. The newest VantageScore 3.0 edition, released last year mimics the FICO range and arranges your history in the following categories:

  • Payment history-The consistency and timeliness of your payments
  • Credit utilization-Your debt-to-credit ratio
  • Credit balances-Total outstanding debt; delinquent or otherwise unpaid
  • Depth of credit-The types of credit you've been approved for in the past
  • Recent credit-The number of new inquiries and their timeliness
  • Available credit-Available credit remaining

Now that we've established the basis of your credit, let's explore some do-it-yourself strategies to repair it. While the DIY route doesn't present the same level of effort for everyone, you can walk away with some effective tips.

Take Advantage of Your Rights

One valuable resource that too many consumers don't take advantage of is their free annual credit report. All three of the national credit bureaus we previously mentioned are required by law to provide you with a free annual credit report or every 12 months. In order to receive yours all you need to do is visit annualcreditreport.com or place an order via telephone. Since you are able to order one every 12 months you can either order all three at once or stagger them throughout the year to monitor your progress.

DIY Credit Repair Strategies

Identify and Report Errors

After obtaining your report, take the time to carefully pore through it and search for any inaccuracies or mistakes. In the event that you spot an error it's critical to report it immediately. You won't have to pay any sort of fee for disputes and the organization is required to correct the error. It's best, however, to file any disputes in writing and to attach proof of the mistake with any associated documents or statements.

Upon receiving your claim, the organization will have thirty days to launch an investigation and then inform you in writing of their results. Negative information stays on your credit report for a total of seven years and bankruptcies last ten years. After that period has elapsed it should be wiped clean from your history.

Contact Creditors Directly

If you are battling exorbitant interest rates or high minimum payments, you can try contacting your creditors and explaining your financial situation. In certain instances, they may be willing to adjust your rates or set setup a repayment schedule that works better for your budget. Another option available to you is credit repair. They contact creditors on your behalf, create a debt-management plan (DMP) and provide you with other credit improvement options. A legitimate credit repair company will offer their services online or at a local office and identify themselves as a non-profit. It's preferred to work with a counselor in-person if possible because then you can get a better sense of the business environment and whether or not they're following through on their claims.

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I would say analyzing your credit report and contacting the credit reporting agencies is the first step in getting in control.

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