The easiest way to correct a credit score is to hire experts. At the same time, the law lets you dispute any errors on your own. The process is rather complex, and it may last for months. If you are considering DIY repair, here is everything you need to know.
No credit bureau is infallible. Reporting agencies compile borrowing histories independently, and they all make mistakes sometimes. According to the Federal Trade Commission, around 20% of all scores in the country are erroneous. The law protects your rights, obliging the bureaus to remove any unverifiable or unsubstantiated data.
Should You Do It Yourself?
The average cost of repair services is $79-$129 per month. Basic cases may be resolved in two three months, complex ones may span half a year. Professionals accelerate the process using their expertise, and these services can make a difference — look at this site with the latest Lexington Law firm review. If you are ready to navigate the complexities of consumer credit laws and formal correspondence, follow the steps below.
Step 1. Starting Point
If your score has fallen for no apparent reason, it may be skewed by errors on the reports. Identify your current status and set clear goals. For example, you may need a higher credit score for a personal loan or mortgage. Repair may cover only part of this gap. The rest may be gained by rebuilding the history — i.e., becoming a more responsible borrower.
Go to My FICO to check your score, or download a finance app like Credit Sesame or Credit Karma. The scoring system evaluates consumers on a scale from 300 to 850. Eight hundred unlocks the “excellent” category with the best conditions and services. “Good” scores begin from 670. Every financial institution defines its own requirements. Generally, loans insured by the government have a lower approval threshold.
Step 2. Collect Your Histories
Your credit reports are constantly changing. Every lender communicates with the bureau based on a billing cycle — usually, every 30 days. Until April 20, 2022, every American may get a free copy of each of their reports every week. This service is available from www.annualcreditreport.com. Download the files from TransUnion, Experian, and Equifax.
Step 3. Examine the Data
Print out the documents and scrutinize every line. Any negative details that look suspicious may be disputed. Commonly, borrowers see the following inaccuracies:
- accounts which do not belong to them;
- incorrect amounts;
- false derogatories;
- misspellings;
- absence of positive information.
Derogatories, or negative events, reflect a failure to meet financial obligations. This includes late and missed payments, collections, charge-offs, bankruptcies, evictions, repossessions, etc. Most of these details continue to affect the score for 7 years. The only exception is the Chapter 7 bankruptcy. This derogatory term expires in 10 years.
Mark any information that needs checking. You may have to file formal disputes with one, two, or all three bureaus. The more mistakes — the longer the process and the more difficult the correction.
Step 4. Collect Evidence
Gather relevant documents that support your position. Make copies of bank statements and any formal communication with your lender. You will need to send them to the bureaus together with the dispute correspondence.
Step 5. Open the Disputes
No universal standard for these letters exists, but you can use the template from the Consumer Financial Protection Bureau. The letter must include your full name, address, and all the items you find questionable. Include facts and reasons for the dispute and request correction.
Do not use ordinary mail, as you need hard evidence of the communication. Certified mail with a return receipt requested is the best option. Keep a copy of the letter and all supporting documents.
After receiving your letter, the institution will have 30 days to conduct an internal investigation. In the process, it will liaise with your lenders to establish the truth. Any items that may not be verified will be deleted. A formal response will be mailed to you. If the bureau accepts the changes, you will also get a free copy of the amended history file.
If Repair Doesn’t Work
Bureaus will not delete accurate details. If your score is low but correct, you should work with different elements included in the calculation. In the FICO system, these are prior payments (35%), the total amount owed (30%), age of records (15%), new accounts (10%), and credit mix (10%).
Make sure no payments are skipped or delayed. Adjust your credit utilization to achieve the ideal proportion between your balances and limits (10%). This may be done by reducing the balances on credit cards, extending the limits, getting a new card, or becoming an authorized user on another person’s account.
Through Experian Boost, you can add phone bills, utility payments, and even video subscriptions to your report and gain around 12 points. Finally, avoid applying for different credit services within a short period of time. Every time a lender checks your history, it leaves a hard inquiry. Rate shopping is acceptable as long as it involves the same type of service (e.g., mortgage).
The Bottom Line
Raising a credit score on your own is feasible but often daunting. Instead of poring over reports and collecting evidence on your own, you could delegate repair to seasoned professionals. This will save time and effort, as long as the provider is trustworthy. The best companies have a money-back policy, positive BBB profiles, and high ratings on websites like TrustPilot.
