Repairing a bad credit history canbe a long and arduous task. Butit's a task that's worth the effort.Good credit can impact almost all financialareas of our lives, including our ability tobuy a home, buy a car, and own a creditcard. So, what steps should you take if youhappen to have a bad credit history? Thefollowing are a few things you need to do:
• Get a copy of your credit report.You need to know the extent of yourproblems before you can devise a strategyfor rebuilding good credit. If youhaven't received a free credit report withinthe past year, get one by calling one ofthe three major credit agencies: TransUnion (800-916-8800), Equifax (800-685-1111), or Experian (888-397-3742).
• Correct errors. If, after reviewingyour report, you find there is inaccurateinformation, notify the appropriatecredit agency. The agency will investigateon your behalf and report back toyou within 30 days. Inaccurate informationwill be removed.
• Supply good credit information. Ifyou have accounts where your credit historyis untarnished, consider adding thisinformation to your credit file.Companies are not required to reportyour credit to a credit agency, but manyare willing to do so if you ask. If theyagree, contact the agency and providethe name and contact informationwhere you have your account. For asmall fee, the agency will do the rest.
• Tell your side. If there is a particularcompany that is reporting poor paymenthistory, you have the right to add a statementgiving your side of the story.
• Wait it out. You can always simplywait the problem out. Under most circumstances,bad credit informationautomatically drops off after 7 yearsfrom the last reported infraction.However, a bankruptcy filing stays onyour credit statement for 10 years.
• Build credit. While you are in theprocess of repairing or waiting out badcredit, be sure you are building newgood credit. People with bad creditsometimes vow to not use credit untiltheir report is clean. But once their filebecomes clean, they find that they stillcan't get credit since they have no credithistory, good or bad.
• Get help. If you are up to your eyeballsin bad debt, you may seek help fromcompanies that specialize in helping consumerssolve debt problems. This area isfraught with scam artists, so you will needto be extra diligent. Doug Horst, ProgramDirector for Consumer Credit CounselingService of Central Alabama, recommendsthat you work with a company that is amember of the National Foundation forCredit Counseling.
You can find a member firm by calling800-388-2227 or by visiting their Website at www.nfcc.org. According to Mr.Horst, "There are no quick fixes to creditrepair and you should be wary of anyonewho tells you there are."
is the founder of The Welch
Group, LLC, which specializes
in providing fee-only wealth
management services to affluent
retirees and health care professionals
throughout the United States. He is the
coauthor of J.K. Lasser's New Rules for Estate
and Tax Planning (John Wiley & Sons, Inc;
2001). He welcomes questions or comments at
800-709-7100 or visit www.welchgroup.com.
This article was reprinted with permission from
the Birmingham Post Herald.
Stewart H. Welch III, CFP