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10 Mistakes to Avoid When Repairing Credit

When cleaning up your credit report, you’ll want to avoid doing anything that could get in the way of accomplishing the ultimate goal, which is to get negative items deleted from your credit report. This means you need to avoid inadvertently making mistakes that could turn out to be very costly.

Do not provide any more information than is necessary to the credit bureaus about the negative item.

For example, if you owe £500 to XYZ company, do not make any reference to the actual amount that you owe. E.g., do not write: “XYZ says that I owe £900, but this is inaccurate. I only owe $500”. This would be a massive mistake because you have now acknowledged the loan, and the credit bureau will simply change the record to reflect the correct amount, but the negative item will remain. All you need to do is to let them know that the amount is not accurate as required by the Consumer Credit Act.

Stay on top of your credit history

Make it a habit of checking all three credit reports at least once every year so that you don’t miss any new items that might negatively impact your credit score. It is also crucial to review your credit score so that you keep abreast of the developments on your credit report. You can stay on top of your credit score by checking your credit report with all 3 credit reporting bureaus by subscribing to a multi-agency credit reporting service that bases your credit score on data from all three reporting agencies.

For instance, if you only check your Equifax report, you won’t see data that may have only been reported to Experian, but not to Equifax or CallCredit. This information will be seen by all lenders, as they will get data from all three reporting agencies. Getting your actual credit score from all three credit bureaus allows you to act in time if and when you discover that there is a problem.

When you are disputing different items, never use the same dispute reason for the same account.

Even if you are disputing an account multiple times, it is crucial to ensure that each letter you send out has a different reason. If you use the same reason more than once, your dispute may be marked down as being frivolous. This is especially true if you are disputing through the online service. If your dispute is marked down for being frivolous, your chances of ever getting it out of your report are very slim.

Do not use the electronic dispute system.

Avoid using the internet templates provided to file your claims with the credit reporting services as using them will increase the chances of your disputes being be denied as frivolous by the credit Bureau even before it has reached its destination. You should also avoid using the electronic internet dispute system on the credit bureaus website. Online disputes often come with preselected choices for you to pick from in order to categorize your dispute. This can box you in to make a selection that may hinder the dispute process.

Furthermore, although it might seem convenient to use on the face of it, the problem with the online process is that they require you to agree to certain terms and conditions that mean that you relinquish many important rights in the process. This might prove very costly later on. For example, you agree that if an item returns verified, you relinquish the right to dispute it ever again.

On the other hand, mailing your dispute offers you the opportunity fully to express the reasons why you think items on your credit report are inaccurate and sending your dispute enhance your ability to include proof to support your dispute.

Always send your dispute letters by certified mail with delivery return receipt all your correspondence with the credit bureau.

You may need to take things further at some point in the future by filing a claim or lawsuit. To do so, you need the paper trail and verify that you definitely sent the claim.

If you have credit cards that you no longer need, do not close the account. Your debt ratio will go up, and this might have an adverse impact on your credit score. You need to keep your debt ratio at around 15%. This makes a big difference. Keep all of your accounts open. Rather than closing any of the accounts, use the account for a small amount once a month, and only pay for it in full when you get the statement.

Try to start paying your bills in full when they are due.

Your payment history accounts for up to 35% of your credit score. If you can, be sure to setup direct debit payments so that your payments are deducted from your account on a certain date every month. This will show that you’re a low-risk customer and that you know exactly how to manage your finances. Do not underestimate the impact of this. Furthermore, try not to use all of your cards. Limit the use to one credit card or two. This will also help your auto insurance score.

When you are rebuilding your credit, a secured credit card would be the perfect option for you.

A secured credit card requires a cash collateral deposit that becomes the credit line for that account. It works like this: You deposit money into an account (£250 – £500) and the lender generally offers you a line of credit that is equal to the amount you deposited. You are virtually guaranteed to be approved for the line of credit, as you are putting up 100% of the collateral.

In other words, the bank has no risk in approving you. By using a secured credit card strategically, you can use it to build up your credit by making timely payments each month, and demonstrate a good payment history on your credit reports.

When disputing a credit card, ask for proof of the original agreement.

If you are certain that a particular loan or credit card has been written off, chances are that the provider will be unable to find the contractual agreement within 30 days which they are required by the law to provide. This provides the opportunity to have whatever entry you have disputed removed from the credit report as if it never happened. Ask for the original contract that you signed as proof that you actually opened that particular credit card in the first instance. Furthermore, state clearly that you want the original contract that you signed when opening the credit card account.

Make sure that all of your personal details are correct, otherwise your dispute will be rejected. Also, ensure that each of the dispute letters has all that information. There should also be the creditors name, the account number, and account name you are disputing in each letter.

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