Step 1: Request a copy of your credit reports from all major credit bureaus. Dispute any questionable negative items on your reports, write to the bureau and ask them to remove the mistakes. It might also help to contact the creditor who reported the error. Some creditors will contact the bureau on your behalf.

Step 2: Negotiate with creditors and work to pay off any outstanding debts. Be careful before paying off old debts as it can harm your credit scores even worse by re-aging the account. Write the creditor a pay for delete letter – an agreement in writing that states that once you pay off the account, they will remove it from your credit report.

Step 3: Rebuild your credit by making all future payments on time and by using credit wisely. If you don’t have a credit card, you should apply for one. If your application is rejected, try to find a co-signer or apply for a secured card – where you deposit some money into a savings account and then get a credit card with a line of credit close to the amount you deposited. Keep credit card balances low.

Step 4: Monitor your credit on a regular basis and lookout for any erroneous or questionable information on your reports. Checking your own credit through a credit monitoring service is OK and will not count against your credit scores.

Learning how to repair and maintain credit can take time, but it’s vitally important to your financial life.  Follow the steps above and you will be on your way to getting the credit you need, when you need it.

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In my experience of helping people repair their credit, it’s always easier to have settled debts removed from your credit reports. Why? Because creditors and collection agencies are much less likely to verify a dispute of a debt that you have paid. They usually won’t even bother responding to the credit reporting agencies about your account if it’s paid. If they don’t respond, the account must be removed. But, sometimes they do respond. They also don’t want to risk verifying something that shouldn’t be verified and getting sued over something that’s not going to make them money.

When the investigation is complete, the reporting agency must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.

There are other ways to have items removed from your credit reports, but disputing them with the credit bureaus is the most popular way.

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Delinquency information (late payments) stays on your report for 7 years from the date of the initial missed payment.

Charge-offs stay on your report for 7 years + 180 days from the date reported to the credit bureau.

Student loan defaults stay on your report for 7 years.

Foreclosures, 7 years.

Judgments or law suits, 7 years from the date of filing.

Bankruptcy – Chapters 7, 11, and 12 stay on for 10 years from the filing date. A Chapter 13 bankruptcy stays on for 7 years from the filing date. Accounts included in bankruptcy remain 7 years from the date they were reported as included in the bankruptcy.

Tax Liens – (city, county, state, and federal) Unpaid tax liens remain 15 years from the filing date. Paid tax liens remain 7 years from the paid date of the lien.

Inquiries stay on your credit report for 2 years, with those in the last 6 months usually given the most consideration.

Positive accounts stay on your credit report indefinitely and paid positive accounts remain 10 years.

Remember, that you have the right to dispute any information on your credit report that may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, or unclear (questionable).  The credit reporting agencies must be able to prove everything they place on your credit report.

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