Rebuilding your credit: You can pay a Credit Counsellor a lot of money to help repair and rebuild your credit but this is something you can easily do yourself with a little patience and perseverance. Educate yourself with free advice available on this blog and by following these simple steps
First you need to see your credit report: Credit Bureaus are required by law to supply free of charge one credit report per year. By contacting each one separately you will then have a file number from the top of the report that you can use to dispute anything on your report that you believe is incorrect.
Here's how to contact the three major credit bureaus:
Creditors: Now before calling the credit bureaus and disputing anything and everything. Look your report over very closely and consider contacting the creditors directly you may find they will be willing to negotiate a settlement of your debt for less than is owed. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.
Charge offs, liens and past due balances on your record within the past 24 months severely damage your credit score. If you have both charged off and collection accounts, but limited funds available, first pay the past due balances. Next pay the collection agencies that will agree to remove all reference of the delinquency from your record. If an agency says all they can do is report the debt paid late then thank them for their time and explain you need to concentrate your limited funds in working with creditors who will delete.
While charge offs and liens older than 24 months affect your credit score paying these off will have negligible effect on your credit score, better to concentrate on the newer accounts where you can do the most good.
Time barred-debts: If you have old debts the statute of limitations could prevent collectors from being able to sue you to collect on them. After that, your unpaid debts are considered "time-barred." According to the law, a debt collector cannot sue you for not paying a debt that's time-barred.
The statute of limitations varies from state to state and for different kinds of debts, also under certain circumstances the clock can be reset, and the time period can be started fresh. "Warning" In some states,if you pay any amount on a time-barred debt the debt is 'revived.' This means the clock resets and a new statute of limitations period begins. It also often means the collector can sue you to collect the full amount of the debt, which may include additional interest and fees.
Delete Letter: A critical factor in negotiating a settlement is a letter to the creditor that requests their agreement to delete the account upon receipt of your payment. A delete letter will remove this item from your credit report completely as if it never existed and almost immediately your credit score will jump up by 20-30 points. Ask that the letter be sent directly to you by fax or email then it will be your responsibility to deliver to the Credit Bureaus saving time and ensuring the Bureau processes it to your file.
Don't give up: It takes a lot of work and patience to repair your credit but the results are worth it. Do not take no for answer, if your initial contact tries to put you off insist on talking with someone who can make the decisions you require.
Credit cards: most companies will work with you to pay down your debt; setting up a payment plan, maybe lowering the interest rate, even discounting the amount owed if paid at once. You will need the cards to help rebuild your new payment record so don't close out the account once you have paid off the old balance.
Payments: Pay very close attention to making your payments on time, if you start your credit repair project and continue to make late payments your credit scores will never improve.
Be Careful with New Credit: Be attentive in your credit behavior if you want to keep a good credit score. Avoid excessive runs of new debt, if you need more credit request a credit limit increase on your current cards rather than apply for new ones.