Credit Repair Blog Series: Part 2

Bankruptcy AttorneysCleaning Up Your Credit Report and Assessing Your Financial Situation.

In this second blog of our Credit Repair Blog Series, ourOrange County bankruptcy attorneys will explore how to clean up your credit report and assess your own financial situation.

Cleaning Up Your Credit Report

Credit reporting agencies often make mistakes and errors, and improving the accuracy of your credit report may help your credit score more than you think. Some common errors include incorrectly reporting the information of another person with a similar spelling name, information reported as a result of being a victim of identity fraud, or having an ex-spouse’s information mixed into your report after a divorce.

The Fair Credit Reporting Act (FCRA) limits how long negative items can be stored on your credit report. Most of these items can be reported for up to seven years, including lawsuits and judgments, delinquent accounts, accounts charged off or sent to collections, delinquent student loans, and paid tax liens.

The first step in cleaning up your credit report is to obtain a recent copy of your credit report. Make a copy and review the entire report, circling each item you find that is erroneous, incomplete, or contains information that should not be reported. For each item that you dispute on a credit report from EquifaxExperian or TransUnion, you can submit the dispute online. The credit reporting agency then has to either re-investigate the disputed items or delete them from your credit report within three business days. Sometimes however, you will need to submit supporting documents by mail along with a letter of your dispute. You can also submit a dispute letter to the company that reported the information. The company will have the same time frame as a credit reporting agency to respond to your dispute. Follow up with each dispute that you make to ensure that the credit reporting agency or company has either deleted or investigated your dispute.

Once your credit report has been cleaned up, check it often to ensure that mistakes are caught and disputed when they are made.

Assessing Your Financial Information

The next step to repairing your credit is to evaluate your financial situation so that you can create a budget, track your savings, and to be able to pay off all your bills on time.

First, you want to sum up your monthly income. This would include all sources of income, from social security income to monetary support you receive from your family, and even your spouse’s income if you are married.

Next, total up your monthly debts. Add all of your debts, even ones that are being deducted from your paycheck, any shared debts you may have with others, or any delinquent debts.

The third step is to tally up your monthly living expenses, which are any expenses that you spend each month to live. This may include anything from gas purchases, cell phone bills, baby food or supplies, and grocery expenses.

Based on the difference between your income and your debts with monthly living expenses, you should be able to see if you have money remaining to put into a savings account to pay off more of your debts. With all this financial information, you can create a budget to live by. If your living expenses are greater than what your budget allows, consider cutting down on living expenses. See what you can reasonably sacrifice, such as an extra car, extra clothes you are purchasing, or recurring living expenses for entertainment, such as Netflix memberships.