If you find yourself in a position where you need to rebuild your credit and improve your credit score, don’t despair. You’ve taken the appropriate steps with help from Family Financial Education Foundation to learn to live within a budget, set money aside for emergencies and large purchases, pay off debt according to a plan, and ultimately become debt free. And thanks to such organizations as the Federal Trade Commission (FTC), there are tips you can use and definite steps you can take to refurbish your credit and boost your credit score.

First things first: Check out your credit score

The first thing to do is make sure that the credit information that exists about you is accurate. That information resides with the credit bureaus. Ask your FFEF Counselor about obtaining an FFEF CreditScore Review. This helpful Review will provide you with a copy of your 3-in-1credit report and your FICO credit scores—the same credit reports and scores used by mortgage companies, banks, and other lenders when determining your credit worthiness. A 3-in-1 report includes information from all three of the major credit-reporting agencies. But more importantly, this Review will help you understand your credit report and make suggestions on how to improve your credit score and dispute any errors that you find on the report.

An FFEF-approved, certified Credit Report Reviewer will counsel you and review your credit report with you line by line to address every concern. This is NOT credit repair. This is important information that can help you make the necessary changes in your financial habits to improve your credit score over time. Call your FFEF counselor for more information about the CreditScore Review.

Under the Fair Credit Reporting Act (FRCA), the credit reporting bureaus and the information providers (the people, companies, or organizations that provide information about you to the credit reporting bureaus) are responsible for correcting inaccurate or incomplete information in your credit report. If you see inaccurate or incomplete information in your credit report, take steps to get it corrected.

1. Contact the creditor or other information provider in writing to state what information you think is inaccurate. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a credit reporting company, it must include a notice of your dispute. And if you are correct—that is, if the information is found to be inaccurate—the information provider may not report it again.

2. Have patience and take the necessary time to improve accurate but negative information. The cold hard truth is, when negative information in your report is accurate, only the passage of time can ensure its removal. A credit reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the last event took place.

3. Add accounts to your file. Your credit file may not reflect all your credit accounts. Most national department store and all-purpose bank credit card accounts are included in your file, but not all. Some travel, entertainment, gasoline card companies, local retailers, and credit unions are among those that usually aren’t included. If you’ve been told that you were denied credit because of an “insufficient credit file” or “no credit file’ and you have accounts with creditors that don’t appear in your credit file, ask the credit reporting companies to add this information to future reports. Although they are not required to do so, many credit reporting bureaus will add verifiable accounts for a fee. However, if these creditors do not generally report to the consumer reporting company, the added items will not be updated in your file.

4. Keep your credit clean. To help establish good credit and ensure your credit report is painting a positive picture of you, it’s important to follow these tips:

• Pay your bills on time. You’re already a step ahead when it comes to paying your bills on time because of your involvement with Family Financial Education Foundation. Nothing helps your effort to improve your credit standing faster than keeping current on all bills.
• Avoid consumer debt. Eliminate or reduce the number of credit cards you have and keep the balances low. It’s wise to have just one or possibly two major credit cards and use them only for emergencies. If you must charge something, make sure you can pay it off at the end of each month.
• Limit the number of inquiries into your credit and don’t open several new accounts at once. The fact is, too many inquiries over a short time period may be perceived as an indication that you are seriously seeking credit, perhaps due to financial troubles or desperation. Similarly, opening several new accounts at the same time could also be seen as a sign of a rough financial patch. To avoid this perception, be choosy when you shop for credit and limit the number of creditor inquiries, and keep the number of credit accounts and balances to a minimum.
• Check up on your credit report at least once a year. Chances are that even if you’ve been good about paying your bills on time, there may be incorrect or outdated information on your credit report that is hurting your credit profile. To ensure the accuracy of your credit report, review it at least once a year. Ask your FFEF Counselor about obtaining an FFEF CreditScore Review. The FFEF CreditScore Review will help you understand your credit report and how to improve your credit score and dispute any errors that you find on the report.

5. Apply for unsecured credit. A local department store may be more likely to issue you a credit card than a national creditor. If the store does grant you credit, demonstrate your financial responsibility by paying all of your bills on time. Just remember that the interest rates or finance charges of the typical department store card are quite high, even 20% or higher, so be sure to charge only what you can afford to pay off each month and not carry a balance with such a high interest rate.

6. Apply for secured credit. If bankruptcy is in your past or if you have had your credit cards revoked, you need to demonstrate that you can handle credit responsibly. One way to do this is to apply for a secured credit card.

Watch Out for Advertisements Promising Debt Relief

In your efforts to improve your financial situation and relieve yourself of some of the stress caused by financial worries, don’t be tempted by advertisements that offer what sounds like a quick fix. Ads promising you debt relief are often really talking about bankruptcy.

If you hear phrases like “consolidate your bills into one monthly payment without borrowing,” “keep your property,” and “wipe out your debts using the protection and assistance provided by federal law,” BEWARE! You’ll find out, maybe when it’s too late, that such promises often involve filing for bankruptcy, which not only hurts your credit but also costs you money in legal fees.

Companies, some of them very large companies, try to appeal to consumers who have poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. These are empty promises. The truth is, only time, a conscious effort, and a personal debt repayment plan like the one you have worked out with FFEF will eliminate your financial woes.