People protect their credit scores carefully, and that is understandable. Credit scores determine how easily you can rent an apartment, buy a car, obtain a mortgage, or even set up your new electric service. A low credit score typically translates to denial or high-interest rates, while consumers enjoy easier and cheaper access to services with a strong credit score.
Several factors negatively impact your credit score, ranging from late credit card payments to personal bankruptcy. The amount of time required to repair your credit score depends on exactly what caused the damage in the first place. If your credit score is low because of identity theft or clerical errors, you need only work through the process of fixing the problem. However, if you have a history of delinquency and defaulted loans, repairing your score may be more challenging.
Check your Score
If you are going to be applying for a new loan, apartment, or credit card, you should first check your credit score. If it is lower than expected, read through the report and look for errors. For instance, you may have paid off a debt, but the creditor did not update the loan status – and it still exists on your report as an unpaid debt. You may even find entries that do not reflect your own activity – whether through fraud or a case of mistaken identity involving someone with the same name.
You have the right to file a dispute with the credit bureau. The dispute must be addressed within 30 days, although they can add 15 additional days to investigate if they notify you. If the disputed item is determined to be a mistake, the credit union should correct your record promptly, resulting in a higher score.
The credit bureau may reject a dispute because they feel the record is correct. If you are certain of the veracity of your position, you may need to gather more supporting documentation and resubmit your claim. If this does not work, legal action may be necessary.
Work with your Creditors Directly
When the debt reporting is correct, but you still want to try to negotiate a solution, you can speak directly to the creditor. Some creditors will remove negative information – even if it is accurate – as either a goodwill gesture or in exchange for paying down the debt to a certain level.
It is important to point out that creditors are under no obligation to delete accurate information from your credit report, and they also have no obligation to negotiate with you. Still, many will offer solutions to collect some revenue as opposed to receiving nothing.
Credit repair typically requires up to six months, although your score should gradually climb with each successful, positive change to your record.
What if Negative Items Cannot Be Removed?
Most negative line items stay on your credit report for seven years. If you cannot remove the adverse items on your credit report due to dispute or negotiation, the only remaining option is to work at rebuilding your credit over time. You’ll want to concentrate on making on-time payments and not opening any new accounts until this is achieved.
There is some good news – your credit score is more heavily weighted with recent activity. The impact of negative items is minimized over time, so committing yourself to making on-time payments from this point forward will push your score upwards.
Is Bankruptcy an Option?
Sometimes, even our best efforts are not enough to extricate us from a challenging situation. Avoiding the problem and hoping it gets better often puts us further behind – so it is best to address our financial issues and formulate a plan of action.
If you are struggling to make payments and are considering personal bankruptcy, call the Sarasota offices of Richard V. Ellis today. As an experienced bankruptcy attorney, Richard can provide the guidance and advice you need to make the best decision for your situation.