If you follow this step-by-step process below, you'll be able to fix a low fico score. This will help you get approved for financing at competitive interest rates, and end the days of paying the expense of a bad credit report.
1. The very first step is to get copies of your credit reports. You need to get one from each major bureau: Equifax, Experian, and TransUnion. Once you have all 3 copies you need to examine them and look for negative items or inaccurate listings.
2. Once you identify negative and inaccurate listings you next need to dispute these items. To do this you must write a dispute letter to each major bureau in which you challenge the validity and accuracy of the listing you want removed. This is entirely legal and Congress passed federal law to ensure you have the right to dispute these items on your credit report.
3. When the bureaus receive your letters and deem your credit bureau dispute valid they will investigate the item. During an investigation they will contact the lender or collection agency that has created the bad credit mark and asked them to verify the account, the dates on the account, and the balance.
If the item cannot be verified than by law it must be removed from your credit report. Experts estimate that up to 3 out of every 4 investigations result in the removal of an item from the consumer's credit report.
4. You also need to settle any outstanding debts that are verified by the lender or debt collector. It is important to know that you should never pay the full balance due because the debt collector purchased your debt for pennies on the dollar. There are reports of one popular Arizona debt collector that was paying 2.5 cents for every dollar debt.
For example if you had a debt of $1000 this particular debt agency only paid $25 to own your debt. The point is you can always settle your debt for much less than the full balance. In exchange for your payment you must also get the debt collector or lender to agree to stop reporting your account negatively to the bureaus. This is common practice and you will not have any trouble securing this agreement. An expert credit attorney such as the lexington law firm can help you with this process and the dispute process.
5. Once your settlement payment is made you next need to dispute the item with the credit bureaus once again. This time when the bureaus investigate the item and contact the debt collector your account will not be verified as per your settlement agreement.
Just by removing the bad credit on your credit reports you will be taking a huge step forward with fixing your credit score. When your credit score gets calculated it weighs the following factors: payment history, credit to debt ratio, amount of credit, length of credit, and types of credit.
The most important factor is your payment history and this is waited up to 40% of your overall credit score. When you remove the bad credit items on your credit report you will be improving your payment history. Unfortunately it doesn't matter how many positive reporting accounts you have in the future as long as there are negative marks on your credit report it will be very difficult to get an excellent credit score.
As a result of the economic crisis many lenders have taken drastic steps to change their lending processes and ensure they are only lending money to individuals with a credit score of roughly 700 or higher. While nothing can be done to change the past you can change the future and end the embarrassment, frustration, and high costs you are currently living with if you have bad credit on your reports.