How to Repair Your Credit Report
Our clients frequently ask us how long their bankruptcy will show up on their credit report. Generally the bankruptcy will be there for 8 to 10 years after your discharge, but that doesn’t mean you can’t begin to repair your credit until then.
You can actually start repairing your credit while you are in bankruptcy and continue your good credit habits for many years to come. The best way to start repairing your credit is to pay your monthly bills, i.e. utility, phone, mortgage, car loans, etc. on time. What we mean when we say “on time” is really a definition that is determined by the credit reporting agencies. “On time” to them means that you pay your bills on or before their due date. Many companies have a two week window after the due date in which they allow you to pay your bill without hassling you. That is considered a late payment in the eye of the credit bureaus and they will treat it as such when determining your credit score.
“…understand the importance of making timely payments… which accounts for 35% of your FICO credit score…” Suze Orman – O magazine, May 2012.
Credit reporting agencies are not always accurate so we suggest monitoring your credit report on a regular basis. Everyone is entitled to a free credit report once a year from each of the three credit reporting bureaus, Equifax (www.equifax.com), Transunion (www.transunion.com), and Experian (www.experian.com). Instead of checking all three at once we recommend that you check one every four months to spread out your free report over the entire year. You may however still check all three at once if you prefer at www.annualcreditreport.com. This is the ONLY FREE credit report available. If you see any discrepancies, contact the credit reporting agency at once to dispute it and request to have it removed from your report. Most negative entries on your credit report should not appear after 7 years (again, Bankruptcy and tax liens can stay on your credit report for 10 years), if you see that a negative entry is still on your credit after the allotted time, you should dispute the entry by notifying the agency that is reporting it in writing. If you have resolved the negative entry with the creditor, request that the creditor notify the credit reporting agency that the negative entry should be removed.
Beware of credit repair scams!! No company or person can remove negative entries on your credit report except you (by disputing the entry or resolving it with the creditor), the creditor who reported it, or the credit reporting agency itself. If anyone contacts you and offers to help you repair your credit for a fee, it is most likely a scam.
Below are some other helpful resources for managing your credit.
If there is a mistake on your credit report, contact all 3 reporting agencies:
- Equifax: (800)685-1111
- Experian: (800)493-1058
- Trans Union: (800)916-8800
Understanding Credit Scores:
- Find a credit counselor: http://www.nfcc.org/FirstStep/locator.cfm or you can call (800)388-2227
- Federal Trade Commission www.FTC.gov
A few other ways to repair your credit are:
1) Obtain a secured credit card. Credit Unions are the most likely source for these. A secured credit card works much like a gift card. You deposit a certain amount of funds on the card and that is your credit limit which you can then spend down. There is no danger of “running up” the card but it gives you the benefits of the regular card activity being reported to the credit bureaus.
2) It is also possible to get a car loan, however the initial interest rate will be very high. With good credit behavior over time you may be able to refinance to get a better rate at a later date.
As always it is a good idea to consult your experienced and knowledgeable bankruptcy attorney regarding credit issues. For more information about this and other topics including bankruptcy and debt collection, please check out the Credit, Debt Collection and Bankruptcy Handbook for North Carolina Consumers.