The District Chronicles

Issue date: 3/7/10 Section: Business

The first step is to check your credit online.

(NNPA) - Repairing your credit may save you money. Over the near term, interest rates will rise.  The Federal Reserve just increased the rate it charges banks for emergency loans. This was the Feds' first tangible move to tighten credit following the Great Recession. Additionally, in order to finance the burgeoning national debt, the government will become a more active player in the credit markets including credit cards, car loans, home mortgages.

The rates that lenders charge consumers are based on two major factors.  First, lenders look at the individual's capacity to pay, as measured by their income in relation to their monthly payments.  Second, they look at their past payment history, as measured by their credit report.  A poor credit history is viewed a higher risk and therefore requires a higher return to the lender, for taking that risk.

Repair Your Credit

An individual can have damaged credit for several reasons.  The most obvious reason is a poor payment and credit history. However, according to a recent study by the Public Interest Research Group, 25 percent of the credit reports surveyed had serious errors that could result in credit denial; 79% contained other serious mistakes and errors; and 30 percent contained credit accounts that had been closed by the consumer, but remained listed as open.

Steps to Credit Repair

The Fair Credit Reporting Act sets the standards that credit reporting bureaus and creditors must follow in reporting credit files. The act also gives individuals the right to challenge the accuracy of their credit report, request a reinvestigation within a reasonable amount of time and have errors corrected or deleted.

1. Get a copy of your credit reports.  You can get a free copy from all three reporting agencies by going to www.annualcreditreport.com.  You can also get your credit score for a small fee.  Review your credit reports and look for errors, inaccuracies and negative credit items.

2. Write dispute letters to the credit bureaus on the items you believe are errors or inaccuracies.  Send your letters by certified mail with a return receipt requested.  Keep copies of your letters and mail receipts.  The Federal Trade Commission has sample dispute letters and more detailed information at www.ftc.gov.

3. The credit bureaus must reinvestigate the disputed items by contacting the information provider and requesting an investigation of their file and a follow-up report.

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