Restoring Your Credit

Credit Restoration May Help Improve Your
Credit Scores-And Save You Money

If you have negative information showing on your credit report, you should develop a plan for getting any erroneous information rectified, and possibly begin a campaign to minimize the effect of the negative items that are properly reported.

As I'm sure you know, mortgage lending has fully adopted the credit scoring models to establish levels of risk on their loans, in addition to considering the property, employment and income, assets and debt levels. A high score allows a borrower to obtain the best terms, lower scores increase the cost to the borrower.

Anything you can do to increase your scores can help you save on fees and interest charges.

First, if you find erroneous information on your credit report, it is in your best interests to get it corrected. This may involve writing to the three credit repositories: Equifax, Experian and TransUnion (E,E,T) and working toward having the information corrected at the source where it is disseminated.

If the item that is in error is the result of a creditor's report to the repositories, you will be more effective by writing directly to the creditor and having them amend their records. That way, each time your credit record is submitted to E,E,T, it will be correct from the source of the information. Hopefully, you have maintained your records so that you can document your position and be able to prove your case that your payment record was better than reported.

You can also choose to embark on a campaign to use the Fair Credit Reporting Act (FCRA) to your benefit. This is the approach that commercial Credit Restoration companies use. Be aware that there is a distinction between Credit Restoration companies and debt management/negotiation companies.

The FCRA provides for the consumer to question any unverifiable, inaccurate or erroneous information reported on their credit file with E,E,T. Once the credit bureaus are notified of a disputed item on a consumer's report, they have 30 days to affirm the item in question with the creditor. If the creditor cannot verify the information within that time period, the credit item must be corrected or deleted from the consumer's credit file.

As you can see, once negative items are removed from your credit report, you credit score can increase and you will begin to be eligible for the benefits that higher credit scores can produce.

If you have the time, patience and organization to administer a do-it-yourself campaign, or if you choose to hire a credit restoration company, you should see significant results within 90 days. Even if the creditor affirms the information that was reported, you still have the ability to file another dispute and have the repository and creditor repeat the process. If the creditor fails to verify the information within 30 days, the item should be deleted.

If you choose to hire a credit restoration company, expect to be quoted a fee up to approximately $400. A higher fee does not necessarily mean that you will receive better service or better results. Also, be cautious about companies that charge monthly fees because they may be motivated to drag out the process to earn higher fees. Be diligent in your research so that you feel comfortable with the stability, experience, efficiency, cost for the service and the testimonials from their past clients.

The best strategy for high credit scores is to develop a strong credit history over time by making all your payments on time, staying within your credit limits and using your credit responsibly. But, if you have some items that are reported as less than perfect, using credit restoration techniques, or hiring a credit restoration company may be a good approach for you.