If you have bad credit and are looking for an easy fix – look elsewhere. However, if you are struggling with bad credit and committed to improving your financial situation by making a serious review of your finances and spending priorities, this may be the right article for you.
This should not be considered legal advice. If you are seeking legal advice, speak with a qualified lawyer with experience in credit issues.
The first step is build your credit is to understand where you are now. Get a copy of your credit report from a free source such as annualcreditreport.com. Review the report carefully. Dispute any reports that you believe to be inaccurate and make sure you have contact information for all the collections that you owe.
If all of this is overwhelming you can also consider using a credit repair company which will provide you with additional support to achieving your goal of improving credit.
If you want to undertake this on your own, it helps to understand a few basic principles about debt and the credit system.
First – how long can negative reports stay on your credit report? Bad marks – including late payments, liens, collections amounts, and chapter 13 bankruptcy – leave your credit report after 7.5 years from the date of first delinquency. If you have filed for Chapter 7 or 11 bankruptcy, that will take ten years to come off your credit report.
When you are questioned about a debt from a potential creditor, always ask them for supporting documentation. The burden of proof, or showing that it is you specifically who owes the money, falls on the creditor and not the alleged debtor.
Now, in some cases creditors are very good about keeping track of proof of debt but sometimes not proof of payment. Make sure you are keeping track of when you pay off debts. This means that after you make a payment it is essential to ask for and then keep the proof of payment. Even if the creditor says it is unnecessary, you should insist. This piece of paper could save you money in the future.
It is also important to look up credit information specific to your state. Look up the statute of limitations in particular but understand that when the statute of limitations is up, a credit is not necessarily required to remove it from your credit report. This is controlled by the Fair Credit Reporting Act (FCRA) which is federal law.
Ultimately, building credit is a matter of making a plan and sticking to it. Ultimately, the best way to improve your credit is to actually earn a higher credit score which you can do by demonstrating your financial responsibility. The good news is that most creditors review your most recent 24 months of activity much more heavily than the rest of your report so a change can be seen relatively quickly.