How Your Free Credit Report Can Help to Repair Bad Credit

Once you have accessed your free credit report and accessing information from one of the three credit bureaus (Equifax, Experian, and Trans Union, respectively), you may discover that your next task is to repair your bad credit. If you fall into this category, do not panic: improving your credit score is something that you can take control of and fix. Remember, though, that obtaining a credit report is a critical first step in repairing your bad credit, and the information contained in a credit report can be used to repair bad credit. The process is free, fully online, and instant.

Once you have your personal credit report, you can work to improve your bad credit status, by following seven simple steps.

Step #1: Check Your Credit Reports. After accessing your free credit report from any one of the three credit bureaus, you should review your report in detail to ensure that it is accurate and updated. Simply noting errors or misinformation in your report might help you repair your bad credit with ease.

Step #2: Correct Errors on Your Report. Should you indeed spot an error on your personal credit report, inform one of the three bureaus, in writing, and by registered mail, of the error. Include copies (not originals!) of any supporting documentation with respect to the error. If a creditor/lender has provided the credit bureau with negative information about you that you contest, then request that the bureau furnishes an explanation of "your side of the story" to any future creditor/lender (remember: creditors and lenders want to lend you money; it is how they make money, so this explanation could go a long way!). The bureau and the creditor are legally required to investigate the matter that you escalate with your registered letter, and provide you with feedback within a reasonable period of time (usually 30 days). Remember: Credit Reports sometimes contain wrong or outdated information, and identify theft may play a role here. Credit Reports identify what is bringing down someone's credit score, which could possibly be used in a plan to correct the derogatory marks. Remember, too, that the Fair Credit Reporting Act (FCRA) is in place to ensure accuracy and confidentiality of the data in your credit report. Should you encounter any serious discrepancies that cannot be resolved, contact the Federal Trade Commission to lodge a complaint.

The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission, is designed to promote accuracy and ensure the privacy of the information used in consumer reports.

Step #3: Close Unnecessary Credit Accounts. Consider closing any open account that you are not accessing, in order to prevent you from the temptation of borrowing money; and potentially sinking further into a bad credit rating situations.

Step #4: Track Your Spending. Budget your income, and ensure that paying off debt is a part of your expenses. If this means that you will have to sacrifice some expenses, then this is what you will have to do in order to improve your bad credit score. It may not be easy or preferable, but gaining control over your spending is a highly effective way to raise your credit score over the long term.

Step #5: Set New Spending Goals. Focus on spending targets and ensure that you meet them. This will not only help you repair your credit score, but will also help you build better spending habits, which will ultimately help you maintain a good credit score over the long term.

Step #6: Pay Your Bills on Time. Ensure that you are prepared to pay the balance, or minimum payment (or somewhere in between) on your loans and other debts. If you have a short-term emergency that prevents this, talk to your creditors about potential reduced or deferred payment schedules until the situation subsides.

Step #7: Consolidate Debt. Some creditor interest rates may be punishing (such as those offered by some department stores). Consider consolidating your debt through a home equity loan or other such loan to take advantage of a lower interest rate. This consolidation strategy also may help you reduce 10 monthly payment into 1; which is easier to remember and track as you repair your credit score.

Solving your credit problems is not easy, and will take time, patience, and understanding of the law. Remember to start with your credit report, and follow this with a careful review of the information in your report from one of the credit bureaus (Equifax, Experian, or Trans Union). With the right focus, tools, and commitment, fixing your bad credit history is a goal that you can surely achieve.