How Do I Repair My Credit?

If you're having difficulty in obtaining credit, your credit report may contain past or current unpaid debts. To repair and build your credit, we recommend you follow the three steps listed below:

1. Get a copy of your credit report.

• Visit www.annualcreditreport.com to receive a free copy of your credit report from each of the three largest credit agencies.
• Review your report and write a dispute letter for accounts that are not yours, or accounts that need to be modified. You need to write a dispute letter for any incorrect information. If the information is correct and it says you owe money you must pay your past debts first. (refer to the following two steps.)
  

2. Determine your monthly income and make a budget.

• Make a list of all of your debts, including the amount of each one, and the interest rate for each one.
• Create a payment plan, taking into consideration your monthly income and monthly expenses.
• Identify expenses that can be cut down or eliminated. With this information you can create a budget that works toward paying off your debt each month.

3. After you have created a payment plan, you will begin to decrease your debt. Remember to:

• Try to pay off old accounts one by one.
• Pay accounts with the highest interest rates first.
• Contact all of your creditors to negotiate a lower interest rate and a new payment plan. Make sure you ask for all agreements in writing.

Useful Tips:

• Remember that repairing your credit takes time, patience, and discipline. Do not lose hope if your credit score does not improve immediately. If you follow your payment plan and manage your bills responsibly, you will see that over time your credit score will improve.
• Once you have paid off your debts, request a proof of payment from your creditors and send a copy to the credit reporting agencies with a dispute letter. It is always advised, as well, to attach a copy of a form of identification.

Your Free Credit Report

Each person has right to a credit report from each of the three credit reporting agencies, Equifax, Experian and TransUnion, once a year, thanks to a law called Fair and Accurate Transactions Act. Obtaining this credit report allows you to see and correct errors and to make sure that the accounts that appear are correct and authentic.

 How Do I Request My Credit Score?

Keep in mind that a free credit report does not contain your credit score. Your credit score is a number between 350-850 that gives companies an indication of your ability to pay off debt. To obtain your credit score you will have to purchase it separately from your credit report.

You know how to obtain a free copy of your credit report, but do you understand it?

• ACCION USA offers free monthly credit seminars in English and Spanish. These seminars will help you learn how to obtain your credit report, how to read the information, and learn credit building and credit repair strategies.