A Do-it-Yourself Guide to Credit Repair

With today's credit crunch limiting the amount of cash available for loans and credit lines, many people are finding it more difficult to qualify for a loan or get the funding that they so badly need. If this sounds like a familiar situation, here are some simple steps you can take to improve your credit score and increase your chances of securing a loan.

First things first - you should start by requesting a free copy of your credit report. There are many options online for requesting a free credit report. Your best choice is to find a service that provides a "three in one" credit report. A 3-in-1 report will give you a better glimpse of your overall credit rating because it provides scores from all three credit reporting agencies.

After you've requested your free credit report take a close look at your credit scores. In a perfect world, you would hope to have a score of 700 or greater. That is considered a good credit rating. Scores between 620 and 700 are average and anything below 620 is potentially in need of credit repair.

Having your credit report in hand will give you an opportunity to make note of any errors. These could be simple things like spelling errors, or out of date contact information. They could also be more serious errors such as false entries and accounts that you did not create. In order to improve your credit score, you will have to write each agency to request that the incorrect information be changed. In order to do this you will need to provide any documentation that you may have to support your position.

The next thing you want a look for is outdated accounts. Any account in your credit report that is older than seven years can by law be removed. Credit reporting agencies often do not remove old accounts unless you specifically request that they do so. To get the outdated accounts off of your credit report, you will need to contact each agency with a formal request that they be removed.

If your credit report shows late payments these can also hurt your credit score. In this case, you have two options. Your first course of action would be to contact the lender in question and asked that the late entries be removed. Oftentimes the lender will refuse to do this. If this is the case you still have an alternate option, you can challenge the entries but the credit reporting agencies as errors. By law the lender has 30 days to respond to any challenges to the information that they have provided that bureaus. If they fail to respond within 30 days the entries must be removed from your account.

If you've followed these simple steps you have made good progress towards cleaning up your credit report. That's half of the battle. Improving your credit score should be your next goal.

Keeping up with your payments and staying within your credit limits is a must. If you're considering paying off outstanding accounts you should do so by focusing on those with the highest interest rates first. If you cannot afford to pay off your accounts in full, paying a little bit extra each month can also lower the amount of interest you pay on the account over the lifetime of the account.

By taking the initiative to request and review your credit report for errors and paying down your debts, you will be in a better position to qualify for any loans you may be seeking now are in the future.