Repairing Your Credit

A trickier task than building your credit is repairing it once you have established a poor history. First and foremost, you must work on repaying your loans. Contact the three credit reporting bureaus and get a copy of your credit report and take action to correct any mistakes on your credit report. You may need to contact lenders to negotiate repayment plans.

If you have had trouble paying your bills on time, you might also consider seeing a credit counselor such as consumer credit counseling services who can help you manage your repayment schedule. Beware of any services offering an easy way to quickly repair your credit—it can take many months or even years to repair credit legitimately.

If you decide to use a credit counseling service, be sure to check with your state attorney general, local consumer protection agency and the Better Business Bureau to find out if consumers have filed any complaints against the agency you are considering. Ask the agency to send you information about its services. A reputable agency will be happy to do this free of charge without knowing any information about you. Ask questions about what services are available, fees and the repayment plan.

Questions you could ask include:

• What services do you offer?
• Do you have educational materials? If so, will you send them to me? Are they free? Can I access them on the Internet?
• In addition to helping with immediate problems, can you help me make plans so I don't end up in trouble again?
• What are the fees? When do I have to pay them? Are there monthly fees? What is the basis for fees?
• What is the source of your funding?
• Will I have a formal written agreement or contract with you?
• How soon can you take my case?
• Who regulates, licenses or oversees your agency? Is your agency audited?
• Will I work with one counselor or several?
• What are the qualifications of your counselors? Are they accredited or certified? If not, how are they trained?
• What assurance that information about me, including my name, address and phone number, will be kept confidential?

You should also ask some questions specific to your debt repayment, including:

• How much debt must I have to use your services?
• How do you determine the amount of my payment? What happens if it is more than I can afford?
• How does your debt repayment plan work? How will I know if my creditors have received my payment?
• How often can I get status reports on my accounts? Can I get access to my account online or by phone?
• Can you get my creditors to lower or eliminate interest and finance charges or waive late fees?
• Is a debt repayment plan my only option?
• What if I can't maintain the agreed upon plan?
• What debts will be excluded from the debt repayment plan? Will you help me plan for payment of these debts?
• Who will help me if I have problems with my accounts or creditors?
• How secure is the information I provide to you?
• Will this appear on my credit report?

Finally, remember that only making consistent payments on your outstanding bills will improve your credit. No one can have accurate information removed from your credit report. If you have bad credit, it can take years to repair it legitimately. No one create a new identity for you. Making false statements or using a fake social security number is fraudulent.

Once you have your payments under control, you can start building a better history through many of the same avenues as discussed in the previous page, Building your credit.

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