Welcome to the first of a 10 part series of posts called Credit Repair 101. Over the next 10 lessons, you will learn the fundamentals required to review, repair and rebuild your credit report and file. So grab a cup of coffee, and your favorite laptop or tablet and start on the path to better credit health. I will be posting a new lesson every Monday and Thursday.
In addition to this online blog based series, in November 2012 I will providing my 4 hour seminar and computer based training class to those who follow this website for a special price.
The first step in repairing or rebuilding your credit is to obtain your credit report and triage the information within these reports.
All consumers are entitled to one free credit report annually from the three major credit reporting agencies. This chapter covers the three ways you can receive this report. The FTC recommends that you do not contact the three agencies independently. Make sure you use the following methods to obtain a credit report.
Use AnnualCreditReport.com For You Credit Report:
The fastest way to get your free report is by going to the website AnnualCreditReport.com. This website was set up in direct response to the FACT act, by the three major credit reporting agencies. On this website, you can follow step by step instructions on how to get your free report from each company. You will need to provide some sensitive information, so make sure you are logging in from a trusted internet source, as opposed to public WI-FI. Be advised, these companies are in the money making business, and they will try everything they can to get you to purchase additional services like credit monitoring. Don’t be fooled. Just stick to the guidelines set forth by the website and you can obtain a credit report free of charge
While many people choose to do this online, the agencies have also created a toll-free phone number and a mailing address to obtain a credit report. The major drawback to this method is the fact it could take several days for you to receive your report, as opposed to instantly online.
To order by phone, call 1-877-322-8228 and follow the automated prompts.
To order by mail, you will have to fill out the FTC Facts for Consumer form (included in Appendix F) and mail it to:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
In addition to the annual free report, you may obtain a credit report as often as you’d like. Many websites, including all three agencies, will try to sell you varying degrees of reports and scores. Choose wisely. I would always recommend purchasing reports from the actual agency instead of of 3rd party websites, as they have more information.
Triage You Report:
Once you have obtained all three reports, you need to triage the reports and decide what to tackle first. I recommend first handling the oldest or incorrect information first, but only if that information is older than 5 years. After outdated and incorrect information, you should try to handle the NEWEST negative accounts first, as they are impacting your credit score the most.
For most consumers, the scale of impact goes something like this:
- New collections, public records, key derogatory, and late payments under 2 years old.
- Middling negative entries over 2 years but younger than 5.
- Negative information over 5 years old.
The older accounts are usually easier, because they are likely out of the statute of limitations, or they will shortly no longer show on your credit file. Middling negative entries are more difficult in general because they might be moved around to other entities, yet they are still within the legal statue of limitations. New information impacts your score the most, which is why I tackled those second right after the oldest information.
Here is a rundown of how long an account can show on your credit report:
- Delinquencies (30 – 180 days): Can remain seven years from the date of the initial missed payment.
- Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked “paid collection” on the credit report.
- Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge off (the original delinquency date), even if payments are later made on the charged-off account.
- Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain seven years from the date they are reported closed, whether closed by the creditor or by the consumer. Positive closed accounts remain 10 years.
- Lost credit card: If there are no delinquencies, credit cards that are reported lost will continue to be listed for two years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.
- Bankruptcy: Chapters 7, 11, and 12 remain for 10 years from the filing date. Chapter 13 remains seven years from the filing date. Accounts included in bankruptcy will remain seven years from the date they were reported as included in the bankruptcy.
- Child support judgments: Remain seven years from the date the judgment is filed.
- Civil and small claim judgments: Remain seven years from the date the judgment is filed.
- City, county, state, and federal tax liens: Unpaid tax liens remain 15 years from the filing date. Paid tax liens remain seven years from the paid date of the lien.
- Inquiries: Most inquiries listed on your credit report will remain for two years.
- Positive open credit information remains indefinitely and paid positive accounts remain 10 years.
Next Lesson: How to Remove Outdated Information
This article was last updated on December 21, 2022