How Credit Report Repair Works
A credit report is your lifeline to qualifying for loans. A good credit report will help ensure that you get the best possible interest rate. Let’s take a look at how this system works.
Lenders run credit reports on buyers when they need to buy something such as a house or car that requires a long-term loan. In the United States, credit reports come from the following agencies – Equifax, Experian, and TransUnion. Each of these agencies use their own system to calculate credit scores and receive credit information. That is why you must take a look at all three. A credit report score can be as high as "800" with a jump of 50 points being a big increase. Higher credit scores enable borrowers to qualify for loans previously denied them and also allow for lower interest rates. A 1% drop in an interest rate on a $250,000 house at a new interest rate of 6%, for example, may drop a payment by about $162 a month, saving the borrower over $58,320 over the life of a 30-year loan. That’s a chuck of cash that could have been used for many other things!
The credit agencies listed above have compiled all your available financial information and calculated a credit score based on the results. Information such as your current home address, previous addresses, employers, credit cards, loans and any late credit payments from the last ten years will be included in this calculation. There will be difference in the credit reports from the different agencies, however they should be very similar, and they all make mistakes. Even the banks, credit card companies and other agencies where they get information also make mistakes. The beauty of our system is that you, the consumer, have the opportunity to remedy those mistakes.
So here is how you can increase your credit score. By federal law, requests for changes to information in a credit report must be answered and corrected within 30 days. If you write to a credit agency questioning any of the "negative" items on your credit report, they are required to investigate the information adn correct it within the 30 days, or delete it from your report. Because they are inundated with requests and this deadline is a tight one for them to make, often the item(s) in question are just deleted off your credit report.
Each letter you send should request only one change at a time, otherwise the credit agency can declare the request as frivolous and are not required to do anything. You will want to send each letter to all three credit agencies and they each have PO boxes specifically set up for complaints. Since they could change the P.O. boxes from time to time, be sure you look it up and make sure you have the right one. Then every month send out another letter referencing a different item on your credit report. After repeating this process each month, over time your credit report should show fewer negative items and your credit score should dramatically improve.
As you can see, this procedure is very tedious and time-consuming and you can either do it yourself or hire an agency such as Lexington Law to do it for you. Either way, if you have a credit report that needs to be repaired, it will be worth the effort in the long run.