STEP BY STEP GUIDE TO REBUILD YOUR CREDIT

How important is a credit score? Your credit rating has an influence on just about every aspect of

your financial life, from the interest rates you are allowed to the job you get. It is a shame that

this measure of assessing your financial health, which is so important, can deteriorate so easily.

If you skip payments on a loan or accumulate debt on your credit cards, your credit rating could

drop dramatically in no time. There is good news, however. Even if your credit rating is at a

dismal level, you are not necessarily doomed to pay high-interest rates and fail credit checks for

the rest of your life. It is quite possible to restore your credit report, first and foremost, check

your credit rating. Are you surprised by the result? Obtain a copy of your credit report to verify

that it is free of errors and that no one has opened an account in your name. You can get your

credit report free of charge from Borrowell or Credit Karma. If you anticipate a higher score,

start by trying to understand the factors that caused your credit rating to drop. Then, to increase

your score, all you need to do is replace your bad financial habits with better ones.

1. Skip monthly payments: The payment due dates on your monthly bills are not just

suggestions. If you skip credit card payments or pay your bills late, you are signaling

lenders that you are in financial trouble, and it lowers your credit rating.

2. Accumulate too much debt: Most lenders limit the amount you can borrow, but if you

use too much of your authorized amount, you can still damage your credit rating. What is

at issue here is your credit utilization rate, a measure that is the level of credit you are

using relative to the total amount of credit you are granted. Generally speaking, you

shouldn't use more than 35% of your credit limit if you want to maintain a good credit

rating.
 3. Go bankrupt: If you've been tried, filed for bankruptcy, or experienced similar financial

circumstances, your credit rating will drop significantly to educate potential lenders about

your level of credit.

4. Reduce your credit report: The length of time your credit history covers has a big

influence on your overall credit rating. Closing your oldest credit account could therefore

hurt your rating.

The best way for rebuilding credit is to manage it properly and carefully. It's crystal clear that

there are no quick fixes to improving someone's credit score, the best way is to be patient and

follow every procedure needed to fix your dilapidated credit score. let's kick start the basic steps

to fix your score, before we start here is the overview of how the credit score is being

determined.

1. The Overview of How The Credit Score Is Being Determined

Payment History consists of 35% of your score, paying all of your bills at the allotted time is

the fastest way to improve your credit score.

Amounts owed consist of 30% of your score, eliminating the amount you owe will go a long

way in improving your credit score.

Length of credit history is 15% of your score, the more open credit history you have, the better.

Never close your oldest credit card.

New Credit is 10% of Your Score, every time you request a new credit card or loan, your credit

score will likely drop for at least a short time.

installment loans, and long-term loans, such as mortgages) will improve your credit score

2. Step To Rebuild Your Credit Score

1. Get A Copy Of Your Credit Report

To identify the error on your credit report, you need to have a copy of the report. Therefore, the

first action to fix your credit is to request a copy of your credit report from any of the three listed

agencies Experian, Equifax, and TransUnion.

Write a letter to request a copy of the credit report.

Your Name

123 Main Street

San Francisco, CA 94109

(111) 222-3333

12/31/2021

Subject: Fair Credit Reporting Act, Section 609

Dear Credit Reporting Agency (Experian, TransUnion, or Equifax),

I am exercising my right under the Fair Credit Reporting Act, Section 609, to request

information regarding an item that is listed on my consumer credit report: ABC Collection

Agency, account number 0123456789.

As per Section 609, I am entitled to see the source of the information, which is the original

contract that contains my signature.

SSN: 123-45-67895e

[If you have a lawyer, state you have legal representation and provide that contact information]

As proof of my identity, I have included copies of my birth certificate, Social Security card,

passport, driver’s license, W-2,

rental agreement, and a cellphone bill. I have also included a copy of my credit report with the

account I am requesting to have verified circled and highlighted.

If you are unable to verify the account with the original contract, the information should be

removed from my credit report within 30 days.

Sincerely,

[Signature]

You will need to assemble three separate packets and send one to each of the credit reporting

agencies (assuming all are reporting the same account). Include a copy of your letter and copies

of the supporting documents. Keep one set of the letter and documents for your records.
 2. Check Your Credit Report For Errors

After you have gotten the credit report, the next step is to review it carefully and patiently and

identify any possible errors or discrepancies. You must pay attention to the following sections

 Payment history: As stated above payment history weighs 35% of your credit score.

Therefore, you must review it critically and digest every available information. Compare

your payments with what you have in the report and if you get an error - for example, a

late payment that you made before the due date - mark it to dispute it.

 Duplicate accounts: Duplicate accounts appear when a debt - such as the outstanding

balance of a credit card or the remaining amount of your mortgage - is reflected more

than once. This lowers your credit score because it directly impacts your debt-to-income

ratio.

 Personal information: Verify that your report does not show errors in your name,

aliases, social security number, and address. All information must be up to date.

 Expired negative factors: Such as foreclosures, judgments, liens, or bankruptcies that

should have already been removed from your file.

 Credit inquiries that you have not authorized: There are two types of inquiries

regarding credit reports, the "soft inquiries", which are the reviews made by the same

user and which have no weight in your rating, and the "hard inquiries", which are those

made by banks. and lenders before approving you for a loan or credit card. If there are

more hard inquiries than you have authorized, you should also dispute them because they

do lower your score.

your loans and debts is up to date, since, if it is higher than the real debt, your score could

be negatively affected.

3. Dispute The Errors In Your Report

To fix your credit report, it is not enough to just review your report and identify the errors, if you

want to eliminate them, you will have to kick start a dispute procedure. It is pertinent that when

you dispute the errors in your credit report you document the case properly, otherwise, the

dispute could be rejected. Complaints or disputes about errors are submitted in writing to the

credit bureaus. However, you also have the option of putting a call through to the creditor or

information provider before doing so to ask them to correct the information. If this doesn't work,

the Federal Trade Commission recommends writing a letter to dispute the errors in the report.

Bellow is the template of the dispute letter obtained from the Federal Trade Commission.

Sample Letter Disputing Errors on Credit Reports to the Business that

Supplied the Information

Use this sample letter to dispute inaccurate information that a business supplied to credit

bureaus. Your letter should identify each item you dispute, state the facts, explain why you

dispute the information and ask that the business that supplied the information take action to

have it removed or corrected. You may want to enclose a copy of your report with the item(s) in

question circled. Send your letter by certified mail with “return receipt requested,” so you can
document that the business got it. Keep your originals. Include copies of the documents that

support your request and save copies for your files.

[Date]

[Your Name]

[Your Address][Your City, State, Zip Code]

[Business Name]

[Street Address][City, State, Zip Code]

Subject: Disputing Information in Credit Report

I am writing to dispute the following information that your company supplied to [give the name

of the credit bureau whose report has incorrect information]. I have circled the items I dispute

on the attached copy of my credit report(s). This item [for instance: retailer account at ABC

Department Store and the account number] is inaccurate [or incomplete] because [describe in

detail what is inaccurate or incomplete and why] I am requesting that [business name] have the

item removed [or request another specific change to correct the information.]

[Add list and description of other disputed items, if that applies.]

Enclosed are copies of [my credit report and any other documents enclosed with a short

description, for instance, your record of payments made] supporting my request. Please

reinvestigate this matter and contact the national credit bureaus to have them delete [or correct]

the disputed item(s) as soon as possible.

Sincerely,
[Your name]

Enclosures: [List what you are enclosing]

4. Wait For Response

The process could take time, a month, or more. After the whole process had been completed and

the verification had been done, the bureau would remove all the erroneous information from the

credit report.

5. Repeat The Procedure As Many Times As Necessary

If you observe too many errors when you review your credit report, you may need to file several

separate disputes. You can include a maximum of five disputes per letter depending on the

number of errors you have made, it may be advisable to make sure that the reports of the other

agencies do not have the same errors, if so, you will have to file several disputes one for each

credit bureau.

3. How To Maintain A Good Credit Score?

Start paying your debts on time: One of the best financial practices to fix and maintain good

credit is to pay debts on time with no exceptions. What does this mean? That you should start

organizing your finances so that you can pay all your bills before they are due. If for any reason

you become late on any invoice or payment, contact the creditor immediately! Thus, you can

request a payment rescheduling so that it does not affect your credit score.
Control expenses: You've already cleaned up your credit report, disputed all the mistakes,

started paying off your credit cards and your monthly debts. What else can you do to repair your

credit for free? Stop the bleeding! It will be useless if you acquire these good financial practices

if you continue to spend more than necessary.

Lastly, estimate how much monthly money you spend on entertainment, luxuries, gas, and

outings. Try to create a limit for each category and don't go overboard. For example, if you tend

to spend $ 2000 per month on groceries, you can try to reduce it to $ 1200 by switching to

cheaper presentations by weight, accessing loyalty offers or promotions, or preferring a generic

brand. Limit outputs to the maximum and examine your subscriptions. Maybe you can get rid of

a couple of them to have more money available month after month.