Credit rating repair can be an arduous process, but with both knowledge and diligence it is possible to improve a credit score. The key aspects of credit rating repair include becoming familiar with the information contained in a credit report, identifying and reporting credit report errors, as well as negotiating with creditors and continuing responsible credit behavior.
The first step in individual credit rating repair is ordering credit reports from the credit bureaus, also known as credit reference agencies in a person's country. Equifax and Experian are major credit bureaus in both the United States and in the United Kingdom. TransUnion is the third major bureau in the United States, while its partner, CallCredit, operates in the United Kingdom. In Germany, the credit rating agency is called SCHUFA. It is important to review all items on the reports. While it is important to look for accounts that have been added to the wrong person's report, it is equally important to verify all the information reported by known creditors. Common credit report errors often include mistakes about the amount owed, the date that an account was paid off, as well as wrong information about late payments.
After reviewing a credit report for errors, a person should contact the credit bureau to report the errors and request an investigation. In the United States, the credit bureau is required by the Fair Credit Reporting Act to both investigate these requests and to contact the creditor to see if the creditor can likewise verify the credit report information. Similar laws exist in the United Kingdom and in other countries. Generally speaking, if the information cannot be verified, it must be removed.
If the negative information on a credit report is accurate, credit rating repair is still possible but will require considerably more time and effort. If someone with a bad credit history has cash on hand, he should contact his creditors to find out if he can arrange a settlement of his debts. In some cases, a creditor may be willing to remove negative credit report information in exchange for paying off or settling a debt.
Time itself is an important tool in credit rating repair. Negative information will eventually drop off a credit report, and many credit granters look most closely at the past 12 to 24 months of someone's credit history. People with bad credit can help improve their credit score by not applying for new credit, paying off old debts, and bringing their credit balances down to 30 percent or less of their current available credit lines. These actions, along with a history of on time payments, can result in significant improvement of one's credit rating.