There are many reasons a credit report can be less than ideal. Life can hand us situations that are out of our control, and our credit can suffer because of it. Divorce, job loss, medical bills are all reasons credit can be damaged. And sometimes we may just forget to pay a bill or we might have been ?young and stupid? and let our credit rating slip. Whatever the reason, credit can ALWAYS be repaired. But credit is just like an automobile. If the car has just not been tuned up for a while or just needs an oil change, it can be repaired quickly. But if it has been in a head-on collision and sat on the side of the house for a few years rusting away, then it will take longer to repair. The car won?t fix itself and neither will a credit report. Either way, we have to start somewhere to begin the process. Below are the steps to get your credit cleaned up and ready to work for you!

  • Obtain a tri-merge credit report.

    It is important to get a ?tri-merge? credit report. This type of report contains your credit rating and information from all three credit bureaus, not just one or two. The three credit bureaus ? Equifax, Experian and Transunion ? can sometimes contain different information. One bureau might have information that another does not, and vice versa. To obtain a mortgage, mortgage lenders are required to use a tri-merge report, so you want to fix everything on that report. The best way to obtain this report is to call a mortgage lender (me!) and I can pull one for you.

  • Analyze the report for accurate and inaccurate information.

    If your credit has collections and/or judgments, it is likely some of those reporting are inaccurate. Collection companies are notorious for being very anxious to report you to the credit bureaus for the bad stuff, but when you fix it or pay the bill, they are not expeditious in reporting the good stuff. As such, you will need to go through each tradeline and determine which are correct and which are not. Has the bill already been paid? Was it charged off and you were told it is a zero balance years ago? Is there a collection you are unsure is even yours? Make notes and write down what you know.

  • Investigate inaccurate or questionable tradelines further.

    Most credit reports will have phone numbers for each tradeline. If they do not, or if the phone number listed is not correct, you might have to do a web search to find the phone number for the company. Make calls to each company that has inaccurate information and to those companies you do not recognize. If the loan number is on the credit report, give them that number when you call. You can also give them your social security number to search for any accounts they have for you. Keep notes of when you call, what they say and write down the name of the person you talk to. Also write down what they say they will do for you if the account is inaccurate. If they tell you the tradeline is indeed inaccurate, or if the account is paid in full, or if it does not belong to you, tell them you want them to send you written confirmation of this either by fax or mail. Make sure they send you something with their letterhead that references your name and the loan number that matches the credit report.

  • Determine what to fix and what not to fix.

    Now that you know what is accurate on your credit report, you can start to repair the damage. However, this needs to be done in order of importance, with your short term and long term credit goals in mind. The obvious long term goal is to have your credit perfect with all negative tradelines showing a zero balance or deleted. If you do not need a mortgage loan within the next 12 to 24 months, start paying off all collections to achieve this long term goal. But if you need a mortgage loan within 12 months, you will want to selectively pay your outstanding negative bills. Only pay those collections that have a ?report date? within the last 24 months. Those recent report dates affect your credit as much as having the negative balance. Conversely, if you have a collection balance reporting on your credit but the report date is two or more years old, don?t pay it off now. If you pay it off, the balance will go to zero but the report date will update to today. This could actually drop your credit score. You will want to wait to pay that off until you have already purchased your home and won?t need a loan in the near future (long term goal). Then you would work on paying those older collections off. Judgments and tax liens will all need to be paid off immediately as they will hinder you being approved for a home loan.

  • Start paying off collections and fixing negative tradelines.

    Now that you know what to pay off, begin saving money to pay them off in order of smallest balance to largest. Notice I say begin saving money to pay them off ? not start making payments to the collection companies. NEVER make payments to collection companies. They will apply much of your payment to late fees and interest, not the principal balance. Instead, find out from each company how much they would take to settle the bill. Most collection companies will settle a debt for about half of the amount owed. Find out that amount and then save up the money to pay it off in one lump sum. Once you pay off a bill, again, ask for them to send you something in writing showing the bill paid in full. Make sure it references your name, the company logo and the account number that matches the credit report. To fix inaccurate tradelines, you will need to ?dispute? the account. Remember how I said you are to have companies send you verification of the bills that are not yours or are inaccurate? You will need to send these letters from the companies to the credit bureaus to dispute these items. Each credit bureau has the process to dispute tradelines on their web site.

  • Build credit with new, positive tradelines.

    If your credit report does not have any positive, open tradelines (auto loans, credit cards, etc.), you will need some for your score to begin to increase. This may be difficult to obtain depending on how low your credit score is. However, work with local credit unions and banks with which you have a relationship. They might have small loan programs to help you establish credit, especially if you tell them what you are trying to accomplish.

  • Check your credit every 2 to 3 months for progress.

    After you have done the above, it is a good idea to have a new credit report pulled every 2 or 3 months to see the progress. This time frame may be shorter or longer depending on how much credit needs to be repaired. When you sit down with me to analyze your credit I can tell you the frequency of pulling a new report. With the new report, you will want to re-analyze everything. Look for anything that changed for the positive; look for things that should have reported better but have not; look for any new negative tradelines. You may have to pressure some of the companies that said they would report a correction to your credit to do so. Make a new game plan with the new credit report following the steps above.


These are the basic steps to repair credit. Each credit report is different and the plan to repair each one will be different as well. Bankruptcies, foreclosures, identity theft, etc., can all create different challenges in credit repair. The main thing to remember is, as mentioned earlier, credit can ALWAYS be repaired. Some reports, just like a wrecked car, may take more work than others. But it can be done!