How to Fix Your Credit with the Help of an Experienced Credit & Debt Collection Lawyer
Written by Cooper & Friedman PLLC on April 23, 2019
A credit score is one of our most important assets. It can determine if we are able to buy a home or car, rent an apartment, or even get a business loan. When applying for a line of credit, a loan officer purchases an applicant’s credit report from a nationwide credit reporting company. This report shows whether the applicant meets the necessary requirements.
If one’s credit score is low, that tends to show a history of not paying off debts owed. A low score could prevent the line of credit from going through or result in a high rate of interest if it does. So how do you go about making sure your credit is in good shape and fix it if it isn’t?
1. Know what your credit score is and understand how it is calculated.
A credit score is updated monthly and is based off of many factors including one’s payment history, the length of one’s credit history, and how many accounts they have open.
- A payment history refers to any current or past bills and whether they were paid in full or on time.
- The length of one’s credit history is the amount of time that one has owed money. Typically, the longer the better. A lengthy credit history shows a fuller picture of one’s ability to pay back their debts.
- How many accounts are open determines the risk associated with providing an additional line of credit. If too many are open, it is unlikely that the applicant will be able to pay off their debts in a timely manner.
Credit scores can range from 300 to 850. Generally speaking, a credit score of 700 or higher is considered a good score. However, most fall between 600 and 750. You can find out your credit score at a participating bank. You can also get a copy of your credit report at any of the three nationwide credit reporting companies: Equifax, Experian and TransUnion. The Fair Credit Reporting Act (FCRA) entitles everyone to one free copy of their credit report from each agency once a year.
2. Practice good habits.
Whether it be the result of medical bills, school loans or credit card debt, most people experience at least one financial rough period in their lifetime that can negatively affect their credit score. If you’re looking to regain a healthy credit score, don’t fall victim to credit repair scams and other gimmicks claiming to instantly clear bad credit. Simply practicing good financial habits can go a long way to rebuilding a credit score worthy of your financial aspirations.
If you haven’t already, pay off any remaining debts. You can do this all at once, or by setting up a payment plan with the creditor. A payment plan might allow you to spread out the payments according to your income. It’s important to pay as many bills as possible, if not all, on time and in full. A late payment for example, can linger on your credit report for 7 years after it is paid.
Once you’ve paid your debt, keep a paper trail documenting any phone calls or written communication that illustrates that the debt has been paid. You can even request a return receipt for proof of payment from the creditor themselves. Additionally, it is advisable to not max out your available lines of credit. Doing so shows creditors that you cannot responsibly manage your credit when you have it.
3. Know your rights.
When you owe money to a business or person, they may report your debt to a debt collection agency. This agency acts as a third party between the creditor and yourself. This third party agency may also report the debt to nationwide credit reporting companies. This can result in a lowered credit score and or harassment. However, there are rules debt collectors must follow and federal laws in place to protect your credit.
Fair debt collection is enforced by the Federal Trade Commission (FTC). The FTC is tasked with providing protections for consumers through the Fair Debt Collection Practices Act (FDCPA). The FDCPA covers personal, familial and household debts, as well as money you may owe on a personal credit card account, auto loan, medical bill or mortgage.
Additionally, the Fair Credit Reporting Act (FCRA) regulates credit reporting agencies to ensure they accurately and fairly determine one’s credit history. Negative information can only stay on one’s report for 7 years with the exception of bankruptcy or criminal records. Additionally, under the FCRA, we have the right to restore our name and credit legally by
- Protecting our information from fraud and identity theft
- Investigating any possible cases of misinformation
- Having inaccurate information removed in a reasonable timeframe
- Suing or seeking damages from those in violation of these rights
4. Fix any errors
While these laws are in place, often it is up to the individual to legally fix their credit by contacting the agencies themselves. This process can be overwhelming and difficult to navigate without the help of a legal expert. Those in violation of the rules must be reported to the FTC. If a credit agency or creditor has reported incorrect information, one may be entitled to financial damages as well as attorney fees.
If you or someone you know is the victim of unfair credit reporting, seek help from the experienced attorneys at Cooper and Friedman. We handle cases on a contingency fee. This means you pay nothing for our services unless we recover money for you. For more information, including a free consultation about your specific situation, please call 502-459-7555 today.