The first step you must take to recover from bad credit is to know what is on your credit report. You are legally entitled to one free credit report each year.
Make sure that everything on your credit report is actually valid. It is not unusual for credit reports to contain mistaken information.
If you do find mistakes on your credit report, contact a reputable credit bureau, such as Equifax, Experian, or Transunion, to request that the erroneous information be removed.
Credit report disputes must be explained in writing and submitted to one of the three credit bureaus. In your letter, explain which information on your report is inaccurate.
Explain that you want the erroneous information removed from your report. Make sure to include a copy of your credit report, with the disputed information highlighted or circled.
Send your letter to the credit bureau via certified mail with a return receipt. This way, you can be certain when the credit bureau has received your letter.
The credit bureau has 30 days to investigate your disputed information. If your dispute is not resolved, the credit bureau is required to include your letter in your credit file and must show on future copies of your credit report.
Do not close any credit card accounts, even those you do not use. If they show on your credit report as open, they are actually helping your credit score.
One of the fastest ways to rebuild good credit is to use credit cards regularly and make payments on time. There are a number of credit cards available at Moneysupermarket that can help you rebuild your credit.
Secured credit cards allow you to deposit money into an account, from which your credit card charges are withdrawn. These are not debit cards, they are credit cards and they show on your credit report.
Using cash or debit cards will not help your credit score, as they do not show on your credit report. This is why it is much smarter to use credit cards when rebuilding your credit.
While working to rebuild your credit, don’t miss any credit card payments, don’t max out your credit on each card and always pay more than the minimum amount.
If you have installment loans open, such as a student loan, an automobile loan, or a home loan, also make sure to always make payments on time. If you do not have any installment loans, it may be a good time to try and obtain one. Installment loans are a fast and excellent way to rebuild credit because they show you are able and willing to make regular monthly payments on time.
If you feel that you cannot overcome your bad debt, there are credit counseling organizations that can provide assistance in financial planning. They will even work with creditors to arrange repayment plans on your behalf.
While recovering from bad credit may be a long, somewhat arduous process, it is not impossible. Plan a course of action and stick to it.
Guest Post by MSM
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