Building good credit or Fixing bad credit, what is the difference?
It will actually takes longer to rebuild credit than building new credit.
Building new credit is similar to building a new home. Start out with a good plan, use good materials and a solid foundation. It takes time and with a proper budget and controlled spending habits one will establish a solid financial structure which will reflect positively to lenders.
Repairing credit can be compared to renovating an old, poorly constructed home. Lenders can still see the old house, so although you may have added some new shiny cabinets, you can not cover up the old electrical or cracked foundation. Positive spending habits on top of old bad credit still carries the baggage of days gone by. There is a reason it is called credit history, it is a reflection of the past financial habits, not the future or the most recent.
You found errors, how can you repair your report?
Notify the credit reporting agency, each one individually, in writing, what information you believe to be inaccurate. Include copies (no originals) of any documents that support your claim. In addition to including your complete name and address, Social Insurance or security number, your letter should identify each item in your report that you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. Transunion dispute resolution can be found here. Equifax provides an online dispute form.
You may want to enclose a copy of your report, and circle the items in question. Mail your letter by certified mail, “signature required” confirming that the credit reporting company received the notice. Keep copies of your dispute letter and enclosures.
Notify the creditor or other information provider, in writing, that you dispute an item. Include copies (No originals) of documents that support your claim. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if the information is found to be inaccurate, the provider may not report it again.
Identity theft is a crime, be sure to not only notify each credit bureau of illegal activity on your accounts, but you are also by law required to report it to legal authorities and creditors. Creditors will be quite helpful in this area in passing along illegal activities to the credit reporting agencies.
Unknown accounts on credit bureau have led to confusion for consumers. As credit card companies sell off their accounts to collection agencies and debt service providers existing accounts that were once listed to one creditor are now showing up with on consumers reports under new names and with new account numbers. Muddying the waters for both the credit bureaus and the consumers. This type of activity should not only be reported to the credit bureaus but also to the respective government protection agencies.
Are you thinking about hiring a company to repair your credit?
Beware of companies that promise to help you build your credit for a fee. Consumer confuse credit repair with credit rebuilding. No credit repair company can do anything you can’t do for yourself. It is impossible for a third party to make changes in your file if the facts have been correctly reported. There are individuals and companies that claim they can fix a bad credit file and the governments of both Canada and the US warn against using such agencies.
Looking at paying to get your credit repaired by some website or company, know this:
There is no “quick credit fix” Only time can remove negative ratings and information. Credit reporting companies, Trans union, Equifax, FICO will not remove accurate negative information from your credit report before the legal time period has expired, which in most cases is 5 to 7 years depending on the type of negative report. Bankruptcy is rated as R9 and will stay on your report for 7 years after discharge. A consumer proposal is rated as R7 and will remain on your bureau for 3 years after final payment.
Only your creditors and the credit agencies are able to alter your credit report information;
You can report inaccuracies directly to the credit reporting agencies and there is a process within each agency that guides you on reporting inaccuracies.
Information will only be changed when your file contains an inaccuracy, often these inaccuracies are due to omitted or not updated accounts by creditors.
Creditors have no obligation to report changes to credit reporting agencies, unfortunately policing your own credit bureau is necessary as creditors do not send positive data as quickly or regularly as negative data.
Understanding your credit score is one of the first steps in getting back on a good financial path. You need to take an active and regular look at your credit bureaus so you will notice irregularities.